July saw the latest stage in Scottish Equitable International's evolution with the launch of its new Dublin operation. The launch has been identified as a key driver in Scottish Equitable International's ambitions to strengthen further its position in the UK market. The Dublin office aims to complement the Luxembourg operation by giving Scottish Equitable International greater scope to develop the right products for the customers' needs.
Scottish Equitable International managing director, David Healy says: 'Our corporate aim is to obtain an even greater share of the UK offshore market. Launching the Dublin operation means we have reached a key milestone in achieving that goal.
As the offshore market in the UK continues to grow, product development and innovation are likely to be crucial factors in the future success of offshore life companies. We see Dublin as the ideal base ' offering us a greater degree of flexibility and potential for greater speed to market.'
Dublin is one of Europe's best known and fastest growing international finance centres and as capital of Ireland, is a full member of the European Union. Dublin offers important tax advantages as funds grow free of domestic taxes (apart from withholding tax on dividends where applicable). For UK investors, investments will grow free of UK income tax and capital gains tax and a tax liability will only be assessed when a chargeable event arises.
Scottish Equitable International (Dublin) is regulated by the Department of Enterprise, Trade and Employment (DETE) in Ireland and, as such, is subject to the Irish Life Assurance Framework Regulations implementing the European Union (EU) Life Assurance Directives.
The DETE supervises companies to ensure they maintain solvency levels well in excess of the EU minimum standards. This means that companies are legally required to hold reserves over and above the amounts expected to meet all their liabilities. Scottish Equitable International (Dublin) is required to file quarterly reports to the DETE in its first few years of operation, so that the DETE can be satisfied that the company can meet its liabilities at all future dates.
Drawing on all these Dublin benefits the company launched immediately with two products, allowing it to maximise short-term sales opportunities.
Money Market Portfolio ' the right solution at the right time
The launch of the Money Market Portfolio, Scottish Equitable International's first product from Dublin, has proved to be particularly appropriate, given recent market turbulence.
Head of sales, Richard Leeson, says: 'It is a great example of offering the right solution at the right time. Just as many investors were getting very nervous about world stock markets, Scottish Equitable International launched an offshore bond offering access to a range of leading low risk, cash-equivalent funds. Cash deposits are a natural refuge for investors during market volatility. But with interest rates at historically low levels, the Money Market Portfolio has struck a chord because it offers the potential for improved returns as well as important tax advantages. Early feedback suggests it has really hit the spot with IFAs.'
The Money Market Portfolio is a low-cost/low commission product giving access to a selected range of externally managed cash-equivalent funds. The funds available include the Merrill Lynch Offshore Sterling Trust Reserve Fund, the Barclays Global Investors' Liquidity First Fund and the Barclays Global Investors' Liquidity Plus Fund. Also available is a Cash Account, which is actively managed by Scottish Equitable International using its institutional buying power to achieve highly competitive rates on deposits.
A key benefit for the client is that Scottish Equitable International makes no entry or exit charges. The underlying funds also benefit from true gross roll up. Additionally, the bond provides the usual offshore tax advantages of tax deferral and the facility to take tax-efficient withdrawals.
Private Client Portfolio ' tailor-made investment
The second product launched from Dublin is the Private Client Portfolio with a delegated custodian facility. Some advisers prefer to appoint an external custodian to look after the assets within this portfolio. The delegated custodian controls the assets, which can bring benefits such as quicker investment decision making, easier administration and access to a wider range of asset managers. Previously, using an external custodian would not have been possible from Scottish Equitable International's Luxembourg base, because as part of the investor protection regulations, the Luxembourg authorities require that the life company's own custodian looks after the assets.
Richard Leeson continues: 'The delegated custodian Private Client Portfolio is an excellent addition to our product range. It is aimed primarily at investment banks and large stockbroking firms with high net worth distribution and the independent financial advisers (IFAs) that work with them. Many of these institutions prefer to retain control of the client's assets. The launch of this Dublin-based product means that now not only can investment advice be outsourced, so too can the custodianship of the assets. This is an important, and potentially lucrative market for Scottish Equitable International to be able to compete in.'
Making offshore business easier
The Dublin products are an attractive complement to Scottish Equitable International's existing products and services. The Luxembourg product range continues to be highly successful, demonstrated by the Inheritance Tax Plan recently being awarded 'Best Offshore Life Product 2002' at the International Investment awards. Underpinning all this is a sales and marketing philosophy designed to make it as easy as possible for IFAs to be able to write offshore business.
An integral part of this has been the development of a series of business development packs aimed at helping IFAs identify and develop specific market segments. The packs contain approach letters, presentations, sales aids, as well as explanations of any technical issues specific to a market segment. So far, packs have been issued covering inheritance tax planning, investing company money, trustee investment and portfolio management. Other popular support material includes the 'world of opportunities' client pack and a highly acclaimed trust pack.
Scottish Equitable International has also developed a website available exclusively to UK-based IFAs. The site includes downloadable literature, daily fund prices, fund performance and fund fact sheets. A very popular part of the site has been the introduction of a range of training modules. Currently IFAs can access training on why Scottish Equitable International, why Luxembourg, introduction to international investment and an introduction to trusts. Coming soon is a why Dublin module to give a detailed insight into the benefits of Dublin as an international finance centre.
Other support services for IFAs include dedicated helpdesks in Dublin and Luxembourg to handle post-sale enquiries. UK-based IFAs also benefit from the local presence of Scottish Equitable's network of 33 branches to handle pre-sale enquiries. IFAs also have access to a team of regional offshore investment specialists and they in turn can draw on a high calibre technical team of tax and trust specialists.
Looking to the future
Scottish Equitable International believes that the launch of its Dublin product range represents the gateway to a new phase of growth for the company.
David Healy adds: 'This is an exciting time for everyone involved with Scottish Equitable International. It is not often you get a chance to launch a new company and with it open up whole new avenues of business opportunities. We see it as the catalyst to achieving our goals in the UK offshore market. The two products we have launched will help us target key market segments with strong growth potential. The next step is to develop further innovative products for the UK market.'
This communication is directed at professional financial advisers. It should not be distributed to, or relied upon by, private customers.
With the vast bulk of client money now going on to platforms, who really benefits? The client, the adviser or just the platform provider?