Trident Trust’s Markus Grossmann on Considerations Critical to Long Term Planning

Markus Grossmann is the Swiss, Zurich-based Regional Managing Director for Asia Pacific, Middle East and Africa of Trident Trust, a firm he first joined in 2010 to open its Singapore office, which has powered ahead in the decade since. He joined a lively and informative Hubbis Digital Dialogue discussion on June 24, during which the panel of experts focused their attention on the latest trends, opportunities and challenges facing wealthy private clients in Asia as they seek alternative residence or citizenship options around the world. Grossmann looked at these issues from the angle of refraction as a trust expert, offering his insights into some of the considerations HNWIs and UHNWIs should deliberate as they make their plans. Hubbis has taken the opportunity to summarise some of the insights he offered delegates during the event.

Markus first cautioned that private clients obtain a comprehensive picture of the issues to overcome and try to seek advice on multiple facets, but also have an overall coordinator, a trusted advisor type individual, who can put all the different pieces in order.

“Very often, people go for very specific relocation advice for their business or for their personal taxes, but the overall assets in different countries are not fully taken care of,” he observed. “And very often, they might be focused on obtaining a new residence or passport, but do not consider the tax situation fully, even though a passport has not got so much to do with taxation, except for the US.”

Seek support from a trusted advisor

He therefore advises these individuals and families to work with a trusted advisor, whether that person is the trustee, the tax advisor, the private banker, or whoever has the capabilities.

“Somebody needs to keep the big picture in mind, and that person should understand the assets and their locations, and they should know the circumstances of the individuals and families,” he said. “All too often, people suddenly tell us they are off, they have the movers coming in, they've planned everything already, but not always with the right degrees of planning and thought.”

Accordingly, Markus strongly advises against haste, even though all too often, it soon becomes clear that clients are not approaching these issues with the right degree of thought and planning. “It is vital to ask the right questions,” he said, “and I do think there is a very valuable role to be played by the trusted advisor in helping ask these questions and focus the clients’ minds.”

Singapore’s many attractions

He also offered his perspectives on jurisdictions from a Southeast Asia viewpoint. Singapore, he reported, has been positioning itself very adroitly to be a beneficiary of many of the key global trends relating to the world’s very wealthy, especially in relation to family offices and a host of incentives to encourage the families of UHNWIs to relocate to the city-state. Additionally, Singapore has rolled out the relatively new VCC, the Variable Capital Company, attracting fund managers into Singapore to establish tax and regulatory efficient onshore Singapore structures, rather than the offshore structures that had dominated for many years.

“Singapore really does tick so many boxes for the very wealthy,” he told delegates. “And, of course, there is an excellent lifestyle, security, healthcare, education, a transparent regulatory and low tax environment, and so forth.”

But the pandemic has slowed things down

He did, however, indicate that Singapore is at the same time highly focused on the pandemic and not issuing employment passes currently, preferring to ensure there is employment for Singaporeans first and not necessarily being swayed by the need amongst companies for skills from overseas. “Their focus is on getting the virus under control and not on opening the doors to outsiders for now, so that has naturally had an effect,” he reported.

He explained that the flow from India and China had therefore shifted to different locations, as it is simply not possible to move to Singapore right now from another jurisdiction.

“While Singapore is on hold, other countries are quite active,” he explained. “We certainly see quite a lot of questions and interest in Dubai and the European jurisdictions, for example, for golden visas, tax residence, and citizenships, and London and the UK remain very high on the list, and so too is the US which has seen a lot more interest.”

Time and pandemics change behaviour

He also remarked that the rationale for seeking alternative residence and citizenships had changed significantly. “Whereas in the past, clients said it doesn't really matter if the business is in India while they live perhaps in Singapore, and their children are in the US, as it was so easy for everyone to travel. But now, a lot more people think more actually about reversing that diversification and focus on one jurisdiction where they have access to family, and to the businesses. You cannot leave India currently, and for somebody to leave Singapore and come back is incredibly difficult.” In short, the game has changed significantly, and new thought processes are emerging in the face of the numerous impediments to our normal lives.

Rising pressures to raise revenues

Markus also commented on low or no tax jurisdictions, for example, Dubai, where he noted that although there is no personal income tax, they have introduced VAT for ease of proving tax residency there.

“Moreover,” he added, “I am sure that Dubai will have further pressure to increase source taxes either on income, on company profits, and so forth looking ahead. Dubai and particularly the DIFC are very much on the move to apply more international standards. There are regulatory advances taking place in terms of data protection standards, AML, due diligence rules and so forth, and I would think the next pressure is on taxation; there seems little way out of that trend.”

High-end onshore jurisdictions

He closed his remarks by commenting on what he calls the onshoring trend, where the offshore companies will still be there, but where we will see a trend into the high-end onshore markets, and that is, of course, where Singapore shines particularly strongly and will benefit under more normal circumstances, as clients can easily and transparently centralise everything in Singapore - their businesses, the family office, their main home, their financial affairs and investments, their family and education and so forth. “And yes,” he added, “Dubai is certainly an option in that regard as well; they are trying to get to the level that Singapore offers, and in the future, it might be a very similar type of offering.”

Trident Trust – Truly Committed to Asia

Global independent fiduciary and fund services firm Trident Trust began life in 1978, opened in Hong Kong in 1994, and its Singapore office reached its 10th anniversary last year. Together the two offices employ over 150 staff. The Singapore operation has been especially successful in bringing North Asian clients to Singapore, attracted as they are by the tax incentives for funds and family offices. The Hong Kong office has grown very rapidly by providing a wide spectrum of structures from PTCs, pre-IPO planning, EBTs and other tailor made trust structures. Trident has recently opened an office in Shanghai to cater for the increased demand from Chinese clients.

The 3 Pillars

The three pillars of Trident include the trust operation, which involves solutions and services for wealthy Asian families looking for the benefits a trust can deliver, typically asset protection, estate planning, inheritance deferment for their children, including the protection of family assets from the mistakes of the younger generations, or, as Grossmann remarks, sometimes protecting the inheritance of the younger generations from the mistakes of the older generations.

The second pillar is Trident’s fund administration business, which provides the infrastructure, administration and accounting for third-party asset managers, whether hedge funds, private equity, debt, or real estate funds. This area is enjoying especially rapid growth, driven by accommodative legislation from Singapore in recent years to attract Asia’s super-wealthy families to use the island republic as their asset management hub.

The third pillar is corporate services, which Trident provides from a very wide range of jurisdictions, covering both offshore and onshore. Those services range from incorporation and registered office, to secretarial services and management representation, if required.

Independence

Grossmann highlights the independence of the firm as a core feature of its long-term success. “We are one of the very few privately-held businesses in our sector,” he reports.

Trident’s DNA is to achieve long-term sustainable growth and balance. There is no pressure for short term performance from the Group’s global management. This approach, together with our focus on growing our teams through organic hiring and having all the right people sitting in all the right seats, keeps our foundations strong, says Grossmann.

Now employing over 900 staff worldwide the Trident Trust Group provides its services to financial institutions, professional advisors, asset managers, family offices and international businesses. Both of the Group’s offices in Asia, in Singapore and Hong Kong, provide all of its three core services. Hong Kong has grown to over 80 staff and Singapore to over 75 staff. Singapore will be moving into a new and much bigger office this coming September to accommodate their growing teams. Grossmann comments “we are committed to our staff, clients and business partners and want to offer a place to share, connect and exchange. As a people’s business, we feel that in person meetings and in person face-to-face interactions are vital.”

Asia Pacific – a huge growth market

Grossmann highlights some key differences between Singapore and Hong Kong for Trident. “Back in 2010, the Hong Kong business predominantly focused on corporate services and the management of offshore companies, but when we opened Singapore, we decided to focus on trusts and succession planning as the market for offshore companies was already very well serviced. Hong Kong has continued its success in onshore and offshore corporate services but has been particularly successful in expanding and growing the trust and fund business with a key focus on China.

He adds that Trident’s expansion in this fund administration arena has been buoyed by the remarkably attractive and forward-thinking regulatory environment Singapore has been creating and the many tax incentives available under the Singapore Income Tax Act and under which the rising tide of single-family offices operate.

The Singapore Variable Capital Company is another weapon in Singapore’s armoury to attract more assets to its shores. “While the VCC at the moment is not available for family offices, only for commercial fund managers, the arrival has added further impetus to fund expansion here, and we have been assisting a number of asset managers in redomiciling their existing funds to Singapore,” Grossmann notes. “Meanwhile, our family office type clients are often utilising all three of the pillars Trident offers. They will come in, establish a trust, create the family office holding company through our corporate service team, and sometimes utilise our fund administration team for full fund administration, redemptions, subscriptions, and administration.”

Grossmann also comments on the company plan for Asia Pacific, where he says the Group works collaboratively across Singapore, Hong Kong and New Zealand. North Asia is handled largely through Hong Kong. China will have another two offices soon. Singapore covers Southeast Asia and India, the latter representing a major opportunity unfurling for Trident, where it plans to establish a physical presence.