In this episode, we discuss economic headwinds, the importance of domicile selection and wider trends in the global pensions sector. David discusses what QB Partners is seeing, and how greater importance than ever before is being placed on pensions planning.
Episode Transcript:
Brandon (00:01.91)
Hello and welcome to the Guernsey Finance podcast, where we bring you interviews with leaders from the global finance industry, as well as news and developments from Guernsey's financial services sector. My name is Brandon Ashplant and I am a head of technical here at Guernsey Finance. For those who don't know Guernsey is a leading global finance centre, renowned for its economic substance, political stability and asset security. The island is a committed leader in the global sustainable finance movement.
To find out more about Guernsey's success in sustainable finance, tune into our sister podcast, the Sustainable Finance Guernsey podcast. We are delighted to welcome today's guest, David White, Managing Director of QB partners who provide independent technical support to financial advisors and product providers. QB partners has a team of consultants with experience and knowledge in a number of different areas of cross border financial planning.
David's own technical background is in pensions and he has been a SSAS pensioner trustee and a staff pension scheme trustee, as well as running personal and executive pensions prior to establishing QB Partners back in 2009. David was sales director at an international life assurance company. David is a chartered insurer and holds the ACII qualification.
In this episode, we'll be discussing the use of pensions in private planning and private wealth planning in particular, along with considerations when choosing a pension domicile. So without further ado, welcome David.
David White (01:38.922)
Thanks, Brandon. Thank you. Good to be here. So just to tell you a little bit about myself, I've worked in financial services, as you said, all my life, mainly for life assurance companies in the technical and sales functions within those companies. And in 2009, I saw the opportunity to establish my own business, which is something I always wanted to do. I wanted to sort of take a break from corporate life.
Brandon (01:42.21)
Brilliant to have you on.
David White (02:08.282)
And we saw the opportunity really in international pensions at that point, particularly QROPS, which are qualifying recognised overseas pension schemes. And that was an area which has become very topical, very popular. Financial advisors were talking about it a lot, but we felt that they needed some help with it because it was a complex area. So we established ourselves as a small firm of consultants who specialised in that particular area.
experts in all types of financial planning and that's not always possible to the depth that they need to be. So we wanted to help them in that particular area of planning. So that quite quickly developed into other forms of international pensions and other forms of cross-border planning and in 2018 we took some additional consultants on and started looking at trust and estate planning and wealth insurance.
And as of today, we've got a small team of technical consultants, and we help financial advisors and product providers around the world with all aspects of financial planning, apart from the investment really. So investment, we leave that to the investment experts, but all other areas of financial and tax planning, we can provide assistance with. So we've got a small team. We're actually based in the Isle of Man, but we deal with people all over the world.
Brandon (03:32.286)
I just want to take the listeners and yourself back to November of last year, back in 2023, because you of course, you spoke at Guernsey's annual Private Wealth Forum on the panel titled a changing world market trends and their impact. Firstly, how did you find the event? And also, you know, what were your kind of key takeaways from that day?
David White (03:54.314)
Oh yeah, I really enjoyed the day. I was pleased to have been invited. I've been to a Guernsey Finance event a couple of years before and I was very impressed with how it was all put together. So yeah, I was delighted when I was asked to get involved in it. And the day was very well put together. As I said, I see it as a benchmark for such events really. If we put on events ourselves, I'd like to think that we could.
use that event as a benchmark. Our events might be a bit smaller and less grand, but there's some great learning points that come out of that in terms of how to run an event. Not least the fact that you had a very high profile keynote speaker, not me, somebody much more high profile than me. As you know, it's Trevor McDonald, the newsreader. And he was fantastic. And I think what that does very well is, one, it attracts people to the event.
There's lots of these events on and it's very competitive. But if you have a very high profile keynote speaker, it gets people attracted to come to the event. And also, you put the keynote speaker on at the end, the old trick, and therefore people stay throughout the event. So what I was impressed with was the venue and the way it was put together. The diversity of attendees across the private wealth sector. You have people from law firms there. I met.
estate agents, very high end estate agents, I have to say I'll have to save till later. And I met financial planners, I met people from product providers and trust companies, and not just from Guernsey obviously, but from London and around the UK and from other jurisdictions as well. So yeah, it was really good. In terms of key takeaways, there was a lot of, I was sat on a panel with two very sort of high profile investment managers.
and there was a lot of discussion about ESG investments and the importance of that. We touched on AI as well and how AI is becoming more prevalent within the financial services world and we had some sort of quite interesting debate about, you know, how does AI fit in, if it does, with private wealth planning because private, high-net-worth private individuals...
David White (06:18.578)
want and value a personal service. But on the other hand, if we can use AI in the right way, it can bring costs down and therefore add better value to the products that are available to these individuals. So that was another thing that I found was interesting from the debate.
Brandon (06:36.178)
Interesting. And thanks for the kind words about the event. It's brilliant to hear that. Um, we're seeing a lot of, um, sort of crossover again. So was it private wealth focused private wealth forms, obviously, as it suggests in the name is a private wealth focused industry event, um, but it seems pension products are increasingly sort of, you know, forming part of the investment strategy in this space. And, you know, more and more, like you say, people are looking to, to this as a, as a key kind of facet of their sort of, you know, investment strategy and investment planning.
David White (06:40.83)
No problem. That's good.
Brandon (07:05.862)
Would you sort of, I guess you do agree with it. Otherwise you wouldn't sort of have turned up at the event on the day. But why is this happening? Why are we seeing this?
David White (07:16.318)
Yeah, I don't necessarily, I've made a distinction between investments and financial planning. I don't necessarily see pensions as an investment, but I completely agree that they are and are increasingly becoming a key important area in people's financial planning. And you know, I think one of the big reasons for that is the fact that pensions are given great incentives by the government in the form of tax relief to encourage people.
to save for their pension in the UK, but also in other jurisdictions around the world. And the reason for that is that if people save for their pension and provide for themselves in retirement, then they're less reliant on the state. So it makes long-term political and economic sense to encourage people to save into their pension because that reduces reliance on the state. So in my view, everybody should have a pension as a...
key part of their financial planning. And it's a cornerstone, a foundation of financial planning. But in spite of my view and in spite of the incentives, not everybody does have pensions as part of their financial planning. And going back to this sort of private wealth space, particularly I think entrepreneurs are not very good at pension planning because a lot of entrepreneurs are very focused on their business or businesses. And they see their business as their
pension. So, you know, when I retire, I'm going to sell my business and I'm going to use that to pay for my retirement. That doesn't always work out. You know, sometimes things can go wrong within business, however well they run, and sometimes that doesn't always work out. So it's important really for, I think, individuals to segregate their wealth and segregate their assets, particularly between their business and their pension, which is for the retirement planning.
If there is a problem with the business at some point, then you've still got your pension planning. So yes, is it becoming an increased part of private wealth and investment and financial planning? Yes, it is. But I think we need to continue to talk about it, because I still see individuals and pockets of individuals who are not looking at their pension planning as much as they should be.
Brandon (09:39.682)
Hmm. And we mentioned at the start of this podcast that sort of QB Partners, uh, your firm specialises in sort of, um, cross border financial planning. What are the main considerations, um, when choosing sort of a pension domicile? What'd you say?
David White (09:56.638)
Yeah, well, yeah, we do with financial advisors and product providers all around the world. So we deal with individuals with lots of cross-border situations. So by cross-border, I mean people who've moved from the UK to live overseas, people who've lived and worked overseas and are moving back to the UK, but also non-domicile individuals in the UK, people who might have.
married, somebody of a different nationality, and these people often end up accumulating assets in lots of different jurisdictions. So it's important that there's a relationship between the jurisdiction in which the pension is held and the country of residence, and bearing in mind that country of residence can change. And the reason that that's important is again because of
David White (10:53.898)
a double tax treaty or a protocol between the country in which the pension is resident and the country of residence of the individual. And individuals, you know, especially these high net worth private wealth individuals can move around from country to country. So there has to be great care taken as to where the pension is located to make sure that it's a compatible jurisdiction, primarily from a tax point of view.
with where the client is resident. And then if the client moves again, that may need to be reviewed. And if they move again, that may need to be reviewed. If there's a couple and one of them is resident in one jurisdiction, but the other one's moving around a lot, that needs to be taken into account as well. So there's a lot of variables that need to be taken into account in cross-border pension planning in particular.
Brandon (11:47.998)
Hmm. And where do you see the choice of domicile sitting in terms of the rankings of other maybe considerations and factors?
David White (11:55.662)
Yeah, I think it's up there with the main considerations really. You've got to look at the domicile, you've got to look at the pension, you've got to look at obviously the credentials of the pension provider and carry out due diligence on the pension provider and make sure that they are going to be around for the long term pensions is long term financial planning. So you need to be working with somebody who you can
establish that ongoing continued relationship with. So that's really important as well as the jurisdiction. Then when you get down to, so the reason I made a distinction between pensions and investment is that pensions are a tax structure really at the end of the day. So they might be a trust or a contract based structure. And then that needs to be invested into investment. So the choice of investment is very important as well. And that depends on the client's
And it also depends on where the client is in their life. So if the client is in the accumulation phase where they're saving for their retirement, then they might be a higher risk investor. They might be a bit more speculative. But once the client gets to retirement age, then they've got a pension fund, and they want to protect that. Typically, they want to protect that pension fund. So their risk appetite lowers, and it becomes about capital protection. So yeah, I'd say they were the.
sort of three main factors really, choose the right jurisdiction, choose the right provider, and then choose the right investment provider and investment manager for the pension.
Brandon (13:31.938)
And you've been a big proponent and an advocate of Guernsey. And of course that was sort of demonstrated no less with your appearance at the Private Wealth Forum. What would you say are the sort of advantages Guernsey has as a sort of pension's domicile?
David White (13:47.594)
Yeah, well, I'm actually based in the Alamand because that's where I've lived for a lot of my career. So I would say other jurisdictions are available, first of all, but, you know, obviously, this is a this is a Guernsey Finance podcast. So, you know, Guernsey is a great jurisdiction for pensions. And the reason for that, when we're looking at this sort of pensions domicile, you know, where the, where the pension.
is resident, as it were, if the pension provider is resident, it's because of this relationship between the country where the pension is cited and the country of residence of the individual. And one of the key advantages that Guernsey has is that it's able to pay pension income gross to many jurisdictions around the world. So we don't have to rely to the same extent on the
double tax treaties, the double tax protocols between the country where the pension is cited and the country of residence because Guernsey is able to pay gross of tax to too many jurisdictions. So when the client reaches retirement age, they start drawing in income, Guernsey will pay out gross and then it's taxed in the jurisdiction, the country of residence. And that's, that simplifies things a lot. And it means that you don't get caught out by, by sometimes.
these double-tax CCs where you have to ensure that if you're working with a country relationship where there's double-tax fees involved, you have to make sure that, one, they work and the client is taxed in the country where the pension is and then taxed in their country of residence as well. And two, sometimes it's better to be taxed in the country of residence rather than the country where the pension is because the tax rates can differ.
So it all gets quite complicated and there's a lot of planning that has to be done. With Guernsey the pension can be paid out gross and then taxed in the jurisdiction of residence. So that's a big advantage. And then we talked about globally mobile people and a lot of private wealth clients are going to be globally mobile, going to be moving around within their careers and even once they retire. And they're moving from one taxed jurisdiction to another. So if they didn't have...
David White (16:09.846)
somebody who was very closely helping them manage their finances, they could get caught out by moving from one tax jurisdiction to another without looking at how that was going to impact on the taxation of their pension income. Whereas if they're working with Guernsey, Guernsey is paying income gross and it's taxed in the country of residence. So then if you move to another country, yet the local tax rate changes, but there's still...
only still only being taxed in one place, move again, it changes again and it's still being taxed in one place. So that's a big advantage, I think, of Guernsey. There are other advantages, I think, of Guernsey. One is that I think it's, we talked about this actually in the Private wealth Forum, I think Guernsey is a gateway to some really
strong multinational organisations who have subsidiaries in Guernsey. And if you've got a private wealth individual, then one, you know, we talked about the importance of the due diligence of the organisation, so one, they can see that it's a robust organisation, it might be a household name, their due diligence that they or their advisor carry out will be satisfactory. But also, if they are globally mobile and moving from one place to another, if the...
Guernsey office that they've originally accessed the pension through and taken out the pension through is part of a global organisation with subsidiaries and other jurisdictions. If the client moves to Asia or moves to the Middle East or moves to America, then it's likely possible that the organisation with whom they have the pension will have offices in those jurisdictions so they can still receive local service. And then the other thing that's really important going back to jurisdiction is
Brandon (18:02.039)
Mm.
David White (18:08.483)
that you're putting your money, it's sometimes people's life savings, it's certainly a big part of their wealth. For a lot of people, their major wealth is in their property, their residence and their pension. So it's a really key part of the individual's wealth and they're trusting that to a jurisdiction and trusting that to a company and trusting that to an investment provider. If the jurisdiction is secure and stable, as Guernsey is,
then that gives them a lot of comfort. Guernsey has a strong standard and poor rating as a jurisdiction. It's on the OECD whitelist. And it has strong political and economic stability. So those are all ticks in the boxes when somebody's looking at which jurisdiction, which provider, and which investment manager. The jurisdictional boxes can be ticked. The pension provider boxes thing can be ticked.
There's obviously investment providers available within Guernsey as well, but you can go further afield in terms of the investment provider if necessary.
Brandon (19:15.567)
Mm. Brilliant. And, uh, just to finish another theme sort of for private wealth form was this idea of the generational handover, which is a key, key sort of talking point, um, within sort of the, I guess the private wealth space at present, um, are you seeing an impact from sort of younger generations? As they start to sort of use these structures? Um, or are there sort of other major drives behind this? You know, how else is the demand for pension products evolving as this sort of younger cohort sort of enters?
David White (19:44.286)
Yeah, that was something, again, we discussed at the Forum, and there were some really interesting discussions about that. And it is something which I'm actually quite passionate about. I have two now grown up children, but still young children, still young adults. So it's something that I'm interested in. And I think the providers have to be careful about this and have to
have an eye on the future. And often providers, financial services providers, they're under a lot of pressure from shareholders to meet targets and to meet sales targets and to meet profit targets on a year by year basis. And they often props a five year sort of planning window. But if you've got people who are in their 20s and their 30s then...
you need to look beyond the five-year planning window, I would suggest, to the future of those people. And there's two things I think, you know, cause me a little bit concern about that. The first is how people engage with financial services is changing dramatically and the difference between how I might engage with financial services and how you, Brandon, might engage with financial services as a young person, there's quite a lot of difference between that, I would suggest. So I will be...
more traditionally engage with financial services, perhaps through a financial advisor, and I like to meet the person that I'm dealing with, etc , etc . Whereas the younger generation are doing everything through mobile, through online, through a lot more using of tech. So I'd say to the providers, you've got to invest in technology, you've got to keep up to date with the technology. I think banks is where this is quite stark. You've got the...
for high street banks who are still quite traditional. Yes, they've invested in technology. Yes, you can have an app for your high street bank on your phone now. But they're nowhere near where the digital banks are. And the younger generation, I actually use digital banks as well. But the younger generation are using the digital banks and favoring the digital banks. And it's the same for.
Brandon (22:05.47)
Hmm.
David White (22:06.246)
trust companies, insurance companies, etc. If you don't start to invest in that technology that young people are using, when they get older and they start to accumulate their wealth, it's going to be accumulated through the digital platforms. It's not necessarily going to be accumulated with those high street banks in my example, but those providers who have more traditional forms of engagement. So that's the first thing that I think is important. And then the other people is, the other thing is that
the providers often have a benchmark in terms of the wealth of the individual that they're dealing with. So, you know, even when there's a wealthy family involved, the younger people within the family may not have access to the wealth until the parents pass away. And sometimes that's deliberate because, you know, the parents want them to be seen as working for their money. They don't want things to come too easy to them.
So, you know, even if they left money, it might be in trust and they might not get access to it till later on in life. And then there's lots of other younger people who just simply don't have that level of money, but they might be in good careers, they might be earning good income, but they, you know, they're younger, they wanna spend it on other things. They've got disposable income parts, but they haven't got investable wealth, if it can make that distinction between having a, you know, lump of money to invest and having a high level of income.
But if the providers ignore those people because they're not meeting their benchmarks in terms of how much money they've got as a minimum investment, then they're going to ignore the future of those people as well because they'll start to accumulate their wealth with somebody else. And then when they are over the benchmark for the provider, they won't necessarily be engaged with that provider because they'll have gone somewhere else. So it's trying to find, and I understand that there's a balance between.
profitability and engaging people and engaging the younger people and if they don't meet the minimum investment benchmarks it might be that at this stage they're not particularly profitable areas of business but we've got to remember that those people are going to be in good jobs, they're going to accumulate wealth and in 10, 15, 20 years time they're going to be above your benchmarks, they're going to have wealth to invest so don't neglect them, don't ignore them.
Brandon (24:06.102)
Hmm.
David White (24:30.518)
find ways of engaging with them, and that will help to reinforce the future of your organisation.
Brandon (24:39.682)
Hmm, definitely. Well, thank you very much for your time today, David. It was a delight to have you on the podcast.
David White (24:45.968)
You're welcome Brandon, it's nice to meet you.
Brandon (24:48.758)
It was great to talk through the changing trends in the pension sector, particularly from a private wealth perspective, and also continuing some of those talking points from the private wealth forum from last year. If you'd like to read more about the forum, please head over to guernseyfinance.com. Thanks to you for listening. If you enjoyed this discussion, we have a backlog of interviews on the Guernsey Finance podcast channel. You can check them out by searching for Guernsey Finance on your preferred podcast platform.
We also have links to David and QB partners in our show notes. So check them out to hear more from them until then. We look forward to hearing back from you soon, but until then it's goodbye from Guernsey.
