A business families man
John started his career at Price Waterhouse, Boston. He then went into private banking, working for Coutts & Co for seven years before moving to MeesPierson (Bahamas) Ltd, where he worked for nine years, latterly as Managing Director. John is now Director of Windermere Corporate Management Ltd, and Windermere Yacht Services Ltd. He is based in Nassau, Bahamas, and provides family office services including umbrella asset management, private trust company services, estate management, corporate services, property management and yacht registration, to name just a few.
John’s work sees him act as custodian for his family business clients. It’s a challenging role, as his clients are always looking to diversify their businesses.
‘Most family businesses are not stagnant,’ John explains. ‘They’re growing and that often means that they are moving into new geographical areas.’ The shift of South American family businesses into Asia is particularly noticeable. ‘Brazil used to be one of the biggest factory nations in the world, and now this industry has shifted to Asia. We’ve seen a lot of South American families who used to produce domestically decide to manufacture elsewhere,’ he adds.
Expansion into new regions creates myriad issues for members of family businesses and, consequently, their advisors. A member of a family business may have to relocate to oversee the development of the new business venture. Moreover, it may not be as simple as relocating just one family member – their spouse and children may move with them. ‘It’s often the case that the upcoming generation are enthusiastic about being involved in running the family business, not only from a strategic point of view, but also from the point of view of physically being present at the office every day. If the family business then relocates, the younger generation may face additional challenges as the logistics of the move, such as cultural factors, environmental factors and their children’s education, are fully considered,’ John says.
A lot of my clients’ family business models are entrepreneurial, and that’s where my natural inclination lies. Going somewhere where there are no STEP members and parachuting in to start a STEP chapter is a different way for me to act on that inclination to forge something new
Opening operations in a different jurisdiction has its own implications for the family business advisor. In such situations John will provide cross-border planning, and regulatory and compliance advice. He explains: ‘When a client decides to diversify their business, this may involve setting up a legal entity in an unfamiliar jurisdiction. In such a situation, you need to be aware of the range of exchange controls and taxation measures implemented in that jurisdiction.’
The best way to address this issue, he says, is to speak with a local advisor: ‘One of my first moves in a new jurisdiction is to speak to a STEP member who knows the geographical area and has local contacts.’ Sourcing someone locally to serve as John’s ‘boots on the ground’ is tricky – the criteria differ in every case. ‘One size doesn’t fit all when it comes to business processes in overseas environments; working with generalists is not always the best solution. It’s important to know what you don’t know and when you need help. What is vital is that you are bringing in people who add value to the venture,’ he says. Making sure you have the best team is something John cannot stress enough: ‘As a family business advisor, it’s all
about making sure you bring the right components to a family business’ team.’
It’s not only relocation of the family business that can cause difficulties; planning the future direction of a family business also creates challenges. John is finding that younger generations of family businesses are looking for help to adjust their operations in line with their personal styles, interests and ambitions. Sometimes their interests lie in a completely different industry than that of the family business. ‘You could have a client whose family business is involved in manufacturing, but that family member wants to move into hotels, IT or financial services’, says John. ‘Some families allocate business lines to specific children based on their interests – there are always at least three dimensions to consider when you’re looking at family businesses.’
Bahamas and FATCA
Regulatory and tax compliance is equally important at home as away. The US Foreign Account Tax Compliance Act (FATCA) looms and John needs to understand its implications for local practitioners. ‘FATCA is a concern for all of us,’ he says. ‘It’s broad, it’s far-reaching and it’s a moving target in terms of changing deadlines and terms. The Bahamas says it’s entering into a Model 1B Intergovernmental Agreement (IGA) with the US, but we have yet to see the terms of it publicly.’
The cost implications are also a concern, says John: ‘The cost element of FATCA is a one-way street for us. The US gets the benefit of having information on their citizens and everyone else gets the cost, without any benefit of a reciprocal provision.’ What is clear, he explains, is that FATCA may just be the start. ‘Every country seems to be attempting to expand its taxable base, so perhaps this cost was inevitable, and the US was just the first to initiate something like FATCA. We’ll just have to wait and see.’
STEP is growing rapidly in Latin America; in 2013 there was a 54 per cent increase in membership. But John is mindful that growth for growth’s sake, and growth without a clear sense of direction, will do the Society a disservice. He is also acutely aware of the difficulties STEP faces in establishing chapters in new jurisdictions: ‘Whenever we’re looking at a new jurisdiction, we focus on STEP’s offer. We need to make sure we have the educational and networking offer in place before we try to build a presence in a new area.’
John believes that professional development opportunities at a range of levels must be available to ensure members have capacity to grow. ‘Included in the strategy for existing chapters and branches must be provision for multiple educational offerings, because, if members are uninterested in the educational offer, we will end up with senior practitioners who are unable to develop.’
The challenges in growing existing chapters are perhaps greater than establishing them in the first place: ‘It’s one thing to start a chapter, but it’s another to make it grow for the benefit of members.’ This challenge is compounded in geographically remote jurisdictions. In such areas, networking opportunities are difficult to organise and the biggest benefit of STEP membership for practitioners in these jurisdictions is the learning opportunities STEP offers. ‘These areas don’t get many speakers coming in from abroad, so the best thing we can do for them is to provide them with content. There’s significant demand for cross-border and civil-law material.’ John describes the challenge of meeting these jurisdictions’ needs as ‘re-inventing’ STEP each time, but believes it is the only way the Society will be able to appeal to its members.
John is resolute that engaging STEP members is key to the Society’s future. STEP needs to appeal to practitioners’ individual areas of interest. ‘I enjoy creating something from nothing. A lot of my clients’ family business models are entrepreneurial, and that’s where my natural inclination lies. Going somewhere where there are no STEP members and parachuting in to start a STEP chapter is a different way for me to act on that inclination to forge something new.’ He continues: ‘Just as I enjoy planning and implementing expansions of entities, giving practitioners avenues to explore their own professional interests will make their association with STEP meaningful.’
John believes the success of STEP’s chapters and branches around the LATAM region will require leaders and ‘do-ers’: ‘Finding someone who can coordinate and plan is just as important as having people who are going to be involved and get things done. People assume that these attributes go hand in hand, but they are often two different categories, which is something we need to be aware of when we’re building a new presence.’
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