Interviews  >  Philip Taylor: Past, present and future

Philip Taylor is something of a contrarian, who believes little has changed in the Channel Islands' approach to financial services in the last 30 years. However, as he explains to Nick Kirby, this might turn out to be a good thing…

Originally from  the Potteries in North Staffordshire, Philip Taylor came to the Channel Islands rather begrudgingly, by his own admission, in 1985. What was expected to be a short-term stay, however, has turned into 28 years' tenure, primarily as a Senior Partner at PwC, but latterly in a number of non-executive roles. Like many with decades of experience in the finance industry in the Channel Islands, he has enjoyed the good times and endured the bad – so he seemed an ideal person to talk to about how the industry has changed in his time here. What businesslife.co didn't expect, however, was the candour of some of his responses.

Tell us about your initial reluctance to come to Jersey.
I came here with my arm twisted, somewhat, by my partners, who said that as a prerequisite to partnership I should move to the Channel Islands. So I thought I'd come and have a look – and the first thing I saw was the quality of the rain and the fog in May. And then I took a look at the high house prices and thought: ‘What on earth would I want to live there for?' However, they persuaded me the sun did shine occasionally – that it wasn't really such a hardship posting – and thankfully that's turned out to be true.

Although I've lived in Jersey ever since, I made a point of not basing my life solely around the islands. I've always been concerned about becoming overly parochial and not spending enough time with contacts and friends elsewhere. So I spent the last seven or eight years of my professional career travelling and bringing that international perspective back to my roles in the island.

From your time in the Channel Islands, what changes have you seen in the finance industry?
Where I think it hasn't changed is that clients still want to make sure their money and interests are safe and secure. That to me is always paramount, and anything that these financial centres do has to underpin that fact. What shouldn't change is that institutions and wealth managers should always look after their clients' interests, and in recent years we've seen that hasn't always happened. In some cases they have been too busy looking after their own.

One thing that has changed is that there is less money managed here on the island. When I first came to Jersey, there were a number of stockbrokers and wealth managers operating here, but now it's all much more centrally managed in other financial centres, such as London. Money here is packaged up and then managed elsewhere – albeit purely in the clients' interest, because you get greater expertise devoted to the management of that money.

Admittedly, I think the need for personalised and strong relationships will always be key, but certainly the amount of money that is physically managed here in the islands has diminished enormously. There will be people here who disagree with that, but that seems to me to be quite an important distinction.

What about new areas of business, and the islands looking to diversify their offerings in financial services? Has that changed much?
At the risk of being contentious, I don't think much has changed at all. If you look at the basic structures that are used these days for private wealth management – you have the trust, and you have Jersey companies with their different variations. Perhaps what is different is we have foundations – but those basic structures are still in place.

What has changed is our geographic reach. I'm not sure Western Europe is as attractive a market as it has been over the last 25 years. It's more difficult to get advantages for holding your money offshore because of the tax legislation elsewhere. But for those people who live and work in other parts of the world – in what we might describe as somewhat politically and economically unstable areas – they want their money in a safe location. Put simply, I think the islands are offering the same thing, but to a different market.

If the islands are only offering the same products, do you think they are going to reach a critical mass once all the new markets have been ‘tapped'?
Well, we must remember the amount of money that is managed in the Channel Islands – if you take it as a percentage of worldwide private wealth, it doesn't really scratch the surface. You only need a small amount of business – and to do it well – to be successful. And because we're dealing in a select part of the marketplace, I think the market will always be there because economic circumstances around the world change, political situations change, and new industries grow, so different types of people will be making money from different sectors. I think we can be pretty sure the world will not stand still.

What do the Channel Islands need to do to secure a portion of that new business?
I think they really do have to go back to basics. I think people will increasingly want an even more personalised service, a more personal relationship with their money managers – they will want to know with a certain degree of immediacy how well their assets are doing, and where they're deployed. We're moving away from ‘product push' to promoting a service of looking after people's wealth in a way that they can relate to and which they can understand. If you go back to the old days of private banking, that's exactly what it was.

So what are the strengths that the Channel Islands have?
They have very good, established and reliable legal systems. They have a good infrastructure of professional services, be they accountants or lawyers. They have recognised financial institutions – and have been prudent in how they avoided the brunt of the financial crisis. Perhaps this is because of the financial institutions they allowed to be established here.

The relationship with London is extremely important too. That's where the money managers primarily are. Clients, wherever they are in the world, will still go to London for advice about how to manage their wealth, and the people giving that advice will give them options. The Channel Islands are one of those options.

And the weaknesses?
It's the same as 25 years ago – we were seen as expensive then and we're still seen as expensive now. People would argue that if you want a quality service then you have to pay for it, but one would argue that the time may come where people may be able to get that quality for less elsewhere.

Did you ever expect anything of the magnitude of the financial crisis to happen? And has the finance industry really learned from it, or will mistakes be made again?
Undoubtedly some of the same mistakes will be made again – that is a sad truth. However, I think the financial institutions that are concerned about their employees, their clients and their suppliers will be trusted more than those institutions that aren't. The world has clearly changed since the crisis, and that will continue to have an impact on the finance industry because clients are now looking for greater transparency. The trust was broken, and when you lose trust, it's very difficult to get it back again. You can promote how much more trustworthy you are, but you've only got to make one mistake and people will say: “You're not real, are you?”

Did offshore centres suffer unfairly in the aftermath of the crisis, with all of the attention thrown on to tax avoidance?
I'm not sure that I would put that interpretation on it, but I have a conflicted view because I live here. No jurisdiction should be dealing with corrupt money or being used as a bolthole for money that's been gained by corruption and bribery and crime – but the Channel Islands have never done that anyway. Did we lose trust? I don't think we lost the trust of our existing customers, but I think the volume of business went down. Private wealth management is a very sticky business – people are very much led by their own experiences, and I don't know how many customers of Channel Island institutions felt they'd been treated badly on a personal basis during the financial crisis.

How optimistic are you for the future of wealth management in the Channel Islands?
When you think about where most wealth is managed in the world, I would suspect that London must be at number one or two, along with New York. The Channel Islands are perfectly placed for people who want to deposit their money and have it managed in London and they may wish to centre it in the Channel Islands. So in that respect, as long as the City of London continues to be a strong place for managing wealth, I can see the Channel Islands will continue to be extremely successful. Not only that, but enormous volumes of money are being generated in emerging regions, and if the City continues to manage a lot of that wealth, then the islands are a good place to have your structure.

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