Challenges and opportunities for new things are often the same. It's like going to a continent that never wears shoes. It's hard to convince the local people to wear shoes, but if you convince them, the market is really huge. Overseas trust is somewhat like this kind of market, after about 10 years of cultivation, in the Asian market, especially in China, most people do not gain much, they just return home, but some are still persisting in.
As we all know, American trust is rising quietly because of the promotion of CRS. I would like to use the practical experience of American trust to discuss the applicability of American trust to Asian customers from the following aspects.
As a trust and estate practitioner (TEP), I have a deep feeling that the difference between trust business and insurance or investment business is: insurance and investment customers pay more attention to the earnings of the product itself, but not so much attention to the trust company itself; but for the trust company itself, we can see it is actually doing the family trust, there is no specific product at all, so everything is ultimately trust. As a Trust Practitioner, you are not selling "Trust" (Sell Trust) but practicing "Trust” (Practice Trust). If a customer finally makes a trust investment, that’s only because of the comprehensive trust which makes him entrust it. A comprehensive trust can be divided into the following levels:
Trust on the sovereign state in which the trust is located. Those who are willing to set up trust in the United States of course have confidence in the United States. There are a lot of people who trust the United States, which is contrary to the propaganda from the authority. For example, when a host speaks patriotically on TV, he makes his children be born in the United States and become Americans. Even someone scolds America for a living, but you will find out that his asset is actually in the United States. Set up a trust in a country is actually a trust of this country. For example, the recent turmoil in Hong Kong will make many people feel that the place is not so stable and reliable. Trust is not speculation, the ultimate goal is to inherit, and this inheritance will depend on at least the next 20 years, so if the politics and economy are unstable, especially where the sovereignty is not clear, this place will not be trusted. This involves another question that compared with the United States, what will Asian customers think about the traditional offshore dependencies such as BVI, Cayman, and Guernsey? In fact, few customers who use offshore islands to do business have ever visited these places, but as a short-term financial service, most of the people are not concerning about the jurisdiction, they are actually concerning whether they can open accounts, these accounts can be in mature financial centers, such as Hong Kong, Singapore or Switzerland. For trust, it's not just about accounts, it's also about how the country supports the terms of the trust (when you open an offshore company and a bank account, you miss looking at the company's charter), so the situation may be very different. It is precise because of this background that it is obvious that powerful countries are more likely to be brought into the inheritance.
Trust a jurisdiction area. When a customer wants to do trust, there must be some pain points. In the long history of serving overseas customers, American trust has been burnishing its acceptability in the international market. The American Trust hasn’t been heeded by most practitioners before 2015, but when people start to learn about it, people shouted that the American Trust’s "offshore" feature is so obvious. It can even be said that it has all the features you can imagine offshore. Trusts in the United States are all state-owned, different state different trust. Competition is fierce because they have to compete with offshore territorial areas and compete among different states. Just because of the fierce competition, every state is making drastic changes to adapt to the international market. For example, Washington has just amended its trust law in 2016 and they are eager for entering the international market. For customers, which jurisdiction area to do trust is suitable? Legally, we can pay attention to the details of the law to see whether privacy and asset protection are enough. But trust is subtle, mostly there are many emotions in it. For example, Alaska's trust law may be more radical and offshore, but it may not have an advantage when competing with Seattle’s, because customers find it more convenient to go to Seattle, there are direct flights to go there, and It's happy memories that go to Pike Place Market to eat seafood, or to watch Amazon's campaign in downtown Seattle which makes you feel like you are in it too. At this time, it is really possible that American dependency is much better than traditional BVI and Cayman.
Trust a trust company. In many jurisdictions, trustees are not always licensed companies. Like Hong Kong, trustees still do not need to be licensed companies. Superficially, this seems convenient and has many advantages. But in fact, no licensing for the industry is not conducive to development. In this regard, Hong Kong is much behind Singapore. Singapore has not even approved more licenses recently in order to not dilute the gold content of existing licensed companies. Letting trustees be licensed is very beneficial to the development of this industry, especially in the international market, that is why American trust companies have to get licenses. In the United States, a lawyer or other compliance professional does not need a license to be a trustee. But in such a competitive market, you will immediately find that if you want to do a trust company in the international market, you must have a license, then a lot of people apply for a license. After all, the United States is relatively large and has not yet tightened their licenses like Singapore. Will a customer trust a licensed trust company? Of course, it's not that simple. Now China's domestic financial institutions have more international experience (many customers still establish contacts with overseas trust companies through domestic institutions). They will also conduct full due diligence, and even conduct a detailed survey of the whole business process details until satisfied. So, trust is really not an easy business, not a lot of money, but a lot of inspection. Trust an American trust company has many other conditions should be considered, but I think there are two important points: first, the trust company should be independent, so-called independence is not to take any investment goods’ commission, so when the investment goods are subject to fiduciary supervision, it will be neutral, otherwise it may affect the independence of fiduciary supervision due to Self-interest; secondly, the trust company has not been recorded as the defendant, which shows that the trustees and beneficiaries of the trust company are both satisfied. In the United States, the lawsuits are so common, so there is no lawsuit for a trust company means its service is very good, and no fraud happened.
Trust the contact person. Seemingly, an overseas trust company can enter the overseas market directly through advertisements and exhibitions, but it is not that simple. After all, family trust involves a large amount of money, which involves the private part of the family, so the person who can give advice directly to family customers must have a good trust relationship. Who are these people? For this question, it seems that the difference between Mainland China and other places is that the wealthy families in mainland China do not have their own family lawyers. Some lawyers tried very hard to become family lawyers, but there were not so many family legal affairs for them to do, so they were not successful. In the process of trust business development, the institutions worked on insurance and asset investment before seem to become the backbone of the Chinese family office. They maintain a close relationship with the high net worth families, meanwhile, their business itself will also generate a certain profit, which allows them to explore many frontier businesses. Another reason is that these professionals, such as senior insurance practitioners, have been undergoing very intensive business development training, which makes them very resilient in the market and has the ability to enter into the relationships that other professionals are not competent for. Anyhow, a customer always trusts people who are close to him, so American Trust's first batch of business and its development in the initial period in China will also belong to the institutions that are more closed to the American Trust companies.
Building trust is a big topic, besides how about the business itself is trust? The above studies are only some simple perceptions of the initial stage of the market, but in the next 2-3 years, when the international trust is becoming more popular among high net worth individuals in China, we can certainly sum up the ways to learn and practice trust-building. In the end, the establishment of the trust is not tricked, but to be and express the real you, align your profession and conscience with the needs of customers ceaselessly, then there will be greater trust, a wider world unfolded in the future.
