Our decision taken recently to launch Novia Global was based on our view that the stars are aligned just right for a technology enabled platform such as ours to enter the ‘offshore’ market. ‘Offshore’ is a convenient catch-all, but our key target market is the affluent worldwide expat community, individuals who like to domicile their savings in a tax friendly environment whilst outside their home country.
This is despite many doubters saying “the market isn’t ready for it”, choosing instead to believe that the Offshore Bond will continue to dominate sales despite the fact that, for many investors, the Offshore Bond is a high charging vehicle that isn’t at all appropriate; in effect I think that these doubters are sticking their heads in the sand and just hoping that the trouble passes but I think they are in for a rude awakening.
Alongside these doubters however are a large number of UK advisers with clients based offshore who have told us they and are desperate to gain access to a multi-currency platform, in order to provide the choice and service taken for granted today in the UK.
The situation reminds me very much of the late 1990s in the UK when life companies ruled the roost and clients were inevitably let down when it came to pay-out time. The opaque nature of the products left those that invested in them with a lot less than they had expected and indeed were led to believe by the life companies they were getting (remember Capital Units and With Profits with its Market Value Adjuster?).
The dirty tricks that were played effectively led to the industry destroying itself as the public became increasingly aware of the way the market worked and the emergence of the platform concept in around 2000. The situation now of course is that platforms completely dominate the retail savings market and this has all happened in the space of little more than ten years.
As far as I can see there are no offshore platforms that utilise technology in anything like the same way as those in the UK do. On-line applications and servicing, straight through processing and extensive suites of portfolio construction and servicing tools are practically unheard of and the technology in use came largely from the last century.
By contrast the technology widely used in the UK, brings the opportunity to invest in an enormous range of assets from anywhere in the world through modern portable devices.
The early signs are that this view has been confirmed as, since we made it known that we are planning to launch an offshore, multi-currency platform, we have received numerous enquiries from both UK advisers and advisers from as far away as Japan, Hong Kong, Singapore and Thailand.
The challenges of establishing a viable worldwide presence are in getting the vision right so that you building something the market actually wants.
This involves building the complex, but user friendly systems that are required, gaining appropriate authorisations in the many jurisdictions that you want to operate in and finally and always the most difficult, securing distribution.
On top of that you need to ensure that you are aware of and understand the cultural differences that may exist, and then there are simply the distances involved and the time that travel can consume. Perhaps not for the light-hearted!
One thing going for us that is often overlooked is the reputation for investment excellence, lack of corruption and political stability that the UK enjoys. The idea of moving your money from countries which are essentially politically unstable or suffer from widespread corruption (often both) is very appealing and is a factor that we believe will help get traction offshore.
There are many countries like this, some not too far from home as can be seen from recent events. The UKs reputation is a major advantage that we enjoy, but one which we often overlook, no doubt because we live here and just get used to it without thinking.
So, is the offshore market ready for a transparent offering or not? Clearly we think the answer is yes but we will soon see, to those who still aren’t convinced, just remember how quickly the market changed in the UK.