On Tuesday 21st July, more than 70 of the Island's Trust professionals were reminded of the need for prudent investment and to maintain standards of care in the current climate, as the industry faces unprecedented levels of trust litigation.
At the ‘Managing Risk in Turbulent Times’ seminar, co-hosted by Spearpoint and Carey Olsen held at The St Pierre Park Hotel, the audience was addressed by Russell Clark – Partner, Carey Olsen, Kevin Boscher – Chief Investment Officer, Spearpoint and Sanna-Liisa Valtanen of Asset Risk Consultants.
Opening the seminar, Russell Clark was keen to sell hope, rather than fear. He took the audience on a whistle stop tour of current Trustee responsibilities, including: the ‘Prudent Investor’ rule; modern portfolio theory and the need to spread risk relative to the risk profile of the client; the duty to take advice; the power to delegate, and to ensure an acceptable standard of care is being delivered at all times.
“As markets start to look up, and investors venture into riskier territory, it is important not to forget the lessons learnt over the past year,” explained Mr Clark. “Trustees’ duties are wide and varied and, whilst trustees cannot be held responsible for the fall in value of a Trust portfolio caused by the global decline, it is vital to ensure proper care has been taken in the management of assets.”
Sanna-Liisa Valtanen, guest speaker from Asset Risk Consultants, provided the audience with a valuable overview of the methods employed to set an investment policy and select the most suitable investment manager(s) for the job. Five core principles were discussed, including: Investment Policy Statement creation; Risk Profiling; Strategic Asset Allocation; Manager Selection and Performance Monitoring.
“The magnitude of change in this industry has been experienced before, but the speed with which it has happened has not,” explained Ms Valtanen. “Private client wealth has come full circle, the Trust market is maturing, there is far greater choice from the investment industry, which is by nature very innovative, and clients are far more sophisticated. The challenges faced by Trustees to remain prudent and deliver an acceptable standard of care, as outlined by Mr Clark, have never been greater.”
Kevin Boscher delivered a captivating presentation in which he predicted positive growth ahead and stated his belief that the UK is through the worst of the financial crisis. He encouraged Investment Managers not to adhere to the ‘Buy and Hold’ strategy but to be active and dynamic in their investments. Boscher reinforced Spearpoint’s investment philosophy of Absolute Returns, based on the desire of high net worth private clients to beat the returns of cash, net of fees, whilst minimising loss of capital, which has proved absolutely the right approach in the past 12 months in light of the fluid, challenging and changing environment.
Boscher explained, “The Armageddon scenario has slowly unwound since early March. Equities have recovered strongly, government bond yields have risen, mortgage rates have risen, commodity markets have rallied and credit spreads have fallen. Although the market environment remains very challenging, many of these factors indicate that we are at least back to levels of last September, which is pre-collapse, so we are in a position to spread a more positive message.’
The event concluded with drinks and canapés, with many attendees discussing the debate topics further with the speakers. All concluded the event had been highly informative and of value.