April 21, 2020
The financial services landscape in the UK has changed dramatically over recent decades.
In particular, the rise of the platform industry in the last twenty years has meant that, like the dinosaurs, Life Assurance companies have had to adapt or die as diminishing tax breaks, restrictive regulation and innovative distribution have led to a distinct separation of life insurance – the commitment to provide a sum in the event of the policyholder’s death – and investment management.
The UK’s highly qualified and strictly regulated financial advisers may find that providers’ focus on investment solutions ignores the real value of advice – financial planning. As more mobile and wealthier UK clients increasingly choose to work outside the UK, OneLife believes the modern relationship between adviser and provider is a partnership, rather than a distribution arrangement. Along with the adviser, the client is the most important element of this ‘tri-partite relationship’.
Modern partnership arrangements understand the importance of a “cultural fit” between the businesses. However, a tendency to deal with the familiar – a recognised UK brand or an administrative base perceived to be closer to home eg Isle of Man or Dublin – can simply maintain business approaches that are more redolent of ancient history than 2020.
From its birth 30 years ago, OneLife has grown its Luxembourg-based business within this modern landscape of full-service financial advice. We are passionate about our customer-first approach to tax-planning for UK expatriates’ unique needs, especially recognising not only the enormous benefits that the transfer of wealth across families can generate, but particularly the preserving and enhancing of clients’ money down through subsequent generations.
Graham Bentley, Managing Director of one of the UK’s leading financial services consultancies gbi2, has worked with UK and international advice, asset management and platform businesses for over 40 years, and is unequivocal in his view on the due diligence responsibilities of “new-model” advisers operating in the offshore market:
“While it’s perhaps unsurprising that some UK advisers have had a tendency to stick with ‘brands’ they think they know, given the RDR experience it is rather disconcerting when they hook up with UK providers that seem to be comfortable with commercially beneficial yet perhaps ‘regulatory-lite’ centres like the Isle of Man and the Channel Islands…”
Dublin has of course risen to prominence as a dynamic administrative centre within the EU, and Mr Bentley has more to say on that subject:
“Modern businesses, sensibly favouring the stronger regulatory framework of the EU, may perceive that ‘English as a first language’ is of paramount importance and hence select Dublin, without recognising that there is a broader opportunity set for business expansion by dealing with Luxembourg’s unique expertise and remarkable multi-lingual capability…”
It is sometimes said that the application of VAT is an issue when considering a provider, but Mr Bentley thinks there is a ‘bigger picture”:
“Luxembourg has the lowest VAT rate in Europe, but the reality of relative costs depends on the product selected and the jurisdiction. There are structures that would be entirely familiar to UK advisers that are very cost effective – and no VAT applies. Even where it is featured, its scope is reduced merely to certain asset transaction fees …”
Luxembourg’s “Triangle of Security” provides advisers’ clients with a level of legal protection unique in Europe. What is more, Luxembourg also grants insurance policyholders a “super-privilege” giving them a priority claim on the assets used for the execution of their contracts, ahead of all the insurer’s other creditors, including the government, employees and social security organisations.
OneLife prides itself in its innovative, strategic partnership approach to relationships with financial advisers across the UK and Europe, but we also recognise there are key attributes we must be seen to include in our product set: recognisable terminology, dedicated document requirement checklists, provision of cost-effective solutions in an increasing number of jurisdictions, and ensuring portability of contracts are the more obvious requirements.
Financial planners tell us they do not want a distributor/provider relationship. OneLife’s culture and strategic partnership approach should be a perfect fit.
Additional information concerning the Luxembourgish offer? Consult our related articles:
Life assurance in wealth management. What tax benefits?
Reassuring the insured. Luxembourg’s Triangle of Security for policyholders.
Life assurance: your estate management toolkit – Episode 3. The dedicated umbrella fund.
