As competition hots up between financial centres with the globalisation of the world economy, the winners of new business will have to offer a variety of bespoke products for each market to stay top of their game
A profitable result of the increasing globalisation of the world economy is that investment and personal finance service providers have an ever-growing number of markets into which to sell.
However, a correspondingly negative result of the global economy is that we face more competition than ever before.
This is where Isle of Man-based companies have a big advantage for several reasons. One is the highly successful public/private partnership between the government and the island's life insurance industries. A second advantage is the balance the island has achieved between firm and credible regulation which is also sufficiently appreciative of company needs - to avoid the slowdown suffered by clumsily-regulated jurisdictions.
The island's hattrick of advantages is completed by the decades of experience we have built up. We have grown adept at identifying new trends among customers and their advisers - and responding fast.
When global competition becomes fiercer, this combination of customer sensitivity and speed of response makes a difference between winning and losing.
Our industry is fortunate in having a very extensive portfolio of products, so we are well placed to meet changes in customer needs and wishes. Old favourites like personal bonds and investment bonds continue to win supporters, as indeed does a wide range of life insurance and savings products.
When it comes to investment choice, the island continues to offer a full panoply of funds. Not only is our menu of geographical and sector investments as good as any in the world, our fund structures continue to provide a variety that others lack. For example, 'mirror funds' are a good value method of buying into the best funds available.
But the key to long-term success still depends on speed of adaptation to market pressures. Advisers have become more sophisticated and their clients have become more demanding. Providers who offer yesterday's solution to today's needs will be history tomorrow.
Intense competition between the various product providers on the island helps to keep us all on our toes and swift to spot movements in the market.
Of course the Isle of Man benefits from being one of the earlier adaptors to the global reach of investment and financial services. We have been a serious player in the game now for a quarter of a century. You cannot buy experience like that - as some of the newer jurisdictions are finding, to their dismay.
One of the advantages of being a mature international financial jurisdiction is that we react with a sure touch to, among other issues, the international regulatory environment. The Isle of Man was among the first international financial centres to make a feature of strong and trustworthy regulation. This matters because everyone ranging from financial advisers and their clients to governments and international bodies now put a very high premium on reputational safety. Only the criminal element wants to deal with a lax jurisdiction - everyone else wants to protect their own reputations and clients' money.
That is why we hear less and less these days of some of the more exotic offshore centres that used to attract a lot of attention a few years ago - usually unfavourable.
International tax and regulation
When even good international financial centres have had their difficulties - the Isle of Man's reputation as a 'clean machine' has helped us win business.
But regulation is an inexact science. Just as it is easy to lapse into laxness, it is also possible to impose a regime so strict it can impede legitimate business. It is not unfair to say that our regulations did, for a brief time, get a little ahead of the marketplace and the other well-regulated jurisdictions.
This is where the long-established public/private partnership in the Isle of Man proved its worth. The authorities listened to the solid case which the industry put forward and introduced a new and comprehensive risk-based regulatory framework. A system that very much led the way in international regulation, and is now being mirrored in several other jurisdictions.
The island's competitive tax structure is another instance of the benefit that flows from having a pro-business administration. The island's tax policy most certainly does not leave education, health and other essential services short of funds. But the focus on very low income and capital tax, in favour of VAT, enables us to compete effectively against international business while still spending more per head on public services than our neighbours in the UK - giving us the best of both worlds.
UK expatriates continue to be a very important marker for our industry. But the days are long gone when the offshore market consisted of little more than a few chaps in the Jockey Club buying a couple of bonds. Today there is a huge multi-ethnic global market to be conquered.
But one thing that the Isle of Man must not do is to fall into the trap of an ethnocentric view of the world - selling exclusively to Britons abroad. Here again our depth of international experience gives us a lead over much of the competition.
Friends Provident (FP), for example, has developed a large business based in Hong Kong - but with most sales coming from the Chinese, not from expats. China is no longer a sleeping giant - it is a fast-growing, major economy and I foresee that the FP's Hong Kong base will continue to grow in importance.
Another very important market of the future is in the Middle East. That is why FP has opened a marketing office in Dubai, not only to serve British expatriates, but a highly diverse international market.
But of course each market has its own distinct characteristics. You cannot expect that what sells in one market will have exactly the same relevance to another. This is why the winners in the race for new business will be those jurisdictions with the variety and depth to customise products and services for each market. The biggest disappointment in international markets so far has been the European Union because it still remains a 'common market' in name only. Selling into the EU will require patience, nerve and a willingness to take the long view. It is not a market for the faint hearted - in fact it is more like a tantalising cream cake on the shelf, just out of reach.
On balance, however, the future is bright for international financial centres, as they benefit from a global market that shows every sign of continuing to expand. Provided that we retain our traditions of reliable service to financial intermediaries, with relevant products to their clients, the Isle of Man can realistically expect to continue to punch above its weight.
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