Simon O’Donoghue, chairman of The Channel Islands Wealth Management Association, tells us why he co-founded the organisation, what it has achieved in its first two years, and what the sector can expect to see in 2023
THE Channel Islands Wealth Management Association was set up in November 2020 to create a unified voice for Channel Island investment management firms, enabling our members to collaborate while continuing to uphold the highest standards of professional development and integrity.
Since our inception, the association has provided a platform from which our members are able to broadcast their thoughts to the industry and the regulator. Our member firms have been working closely together so that we, as a sector, are well placed to embrace new concepts and opportunities.
We have three key work groups in education, diversity and technology, and a strong committee made up of individuals from firms which represent our membership profile. These range from the largest of global firms to smaller boutique operators and highly experienced individuals.
The CIWMA continues to focus on a number of key issues facing the industry, including the need to attract a broader base of talent to the sector. We are continually identifying trends that will impact the wealth management industry and preparing our members for any changes that may arise.
We have a responsibility to our members to ensure that the Channel Islands are in tune with global industry initiatives and act accordingly so that the islands are leading the way. In 2022, the CIWMA has hosted a number of events examining a variety of topics, all of which were very well attended.
This year has also seen the CIWMA co-ordinate with the Channel Island Financial Ombudsman, discussing issues and opportunities facing the industry. We had discussions with bankers and Jersey Finance on difficulties with opening offshore bank accounts as well as the adoption of open banking.
We embraced the adoption of digital AML, as set out in the handbook in May, and saw the first fully digital investment manager, Spring IM (spring-im.com), launch in the Channel Islands. Another new entrant to the market in Jersey, was TMGA (tmgawealth.com), and furthermore a new South African manager is currently in process in Guernsey.
This year has been an interesting one for the wealth management sector. Discretionary managers have suffered their worst performance for over 20 years, with bonds and equities declining together to a level not seen since 1994.
In the past 150 years, there have only been four years (1941, 1969, 1987 and 1994) in which both equities and bonds ended the year in negative territory. This year is on track to be the fifth and the most extreme.
With this in mind, I believe we will see a change in how investment managers evaluate risk and assess whether the traditional 60/40 approach remains appropriate for investors.
Workplace pensions are rumoured to be next on the to-do list with local legislators although we cannot yet say when. However, next year I predict that we will see an increase in the use of investment platforms offshore as clients strive for better reporting, and who can blame them with the performances they were seeing throughout 2022? (Platforms also work seamlessly with workplace pensions.)
That said, there is always an upside to a down market and, with recent sell-off, markets are now much cheaper than they were, providing plenty of opportunities for investors to buy in at much lower valuations.
Firms holding Jersey-regulated investment business (A, B, C) licences and Guernsey-regulated (Protection of Investors) investment licensees are invited to join the CIWMA. For more information, please email Simon@spring-im.com.