Survey highlights positivity and opportunities for innovation
At the end of last year, we presented the findings of our second annual JFA members survey – a project that will be instrumental in informing the organisation’s and our industry’s direction and strategy this year and beyond.
Exploring key opportunities and issues for Jersey’s funds industry, the findings painted a generally positive picture as far as the sentiment of practitioners is concerned, and their perceptions of Jersey as a specialist alternative funds jurisdiction.
Amongst its key findings, for example, were that the industry’s approach to the key macro issues were largely optimistic. On Brexit and new economic substance rules, attitudes were balanced but largely positive, with over 80% of respondents saying Brexit would be neutral or increase business and around three quarters saying the same about substance rules.
Members were also very positive in terms of their overall growth outlook for the year ahead, with 84% saying they were confident or very confident of growth over the coming five years, a significant increase from last year.
These responses tally with the performance we saw in our industry over 2019, with NAV figures reaching new record highs of £342bn and private equity in particular being the stand out performer.
We’ve also seen asset managers continuing to commit to relocating to and establishing a presence in Jersey, which is a huge positive in light of the economic substance rules introduced last year, whilst the number of managers making use of private placement through Jersey and into the EU reflects the high regard in which Jersey is held for straightforward, seamless market access.
We really shouldn’t underestimate just how positive the outcome of Jersey’s work around the key issues such as Brexit and substance have been, or just how significant the recognition Jersey received from the EU almost exactly a year ago was for our industry – it signposted that, without doubt, as a jurisdiction we are serious about cooperation and global standards, and that has translated into good business flows.
The fact that practitioners are confident that Jersey can maintain this growth trajectory against what continues to be a challenging global environment is hugely encouraging.
But that’s only really half the story, because what really stands out from the survey findings is that, despite being so positive about the future, our industry is not complacent and is pragmatic and ready to find ways to continue to enhance our proposition and hone our vision to provide the perfect ecosystem for cross border alternative funds – conscious that competition is very real and that the environment around us continues to change.
As an industry, we are very clear that maintaining growth requires a commitment to innovation, continuing to source the best talent, engaging with stakeholders, and differentiating ourselves through service quality, ease of doing business and stability.
In respect of technology, for instance, the survey indicated a clear trend, with over 56% of respondents saying that they had employed automated technology over the past year. That sort of investment is impressive, and will be pivotal in meeting the needs of alternative managers in the coming years in areas like cyber security, reporting and data management – around 95% of respondents said they considered automation will have a moderate or significant impact on them over the coming five years.
Meanwhile, there’s a real appetite to back product development – around three quarters of member firms said they would be willing to contribute ring-fenced fees to the regulator in order to fund product development. Enhancing onboarding procedures for new clients came out particularly strongly in this respect, rather than bringing new products to market – through automation and online portals, and by looking again at significant simplification and clarification of Jersey’s AML regime.
There were also a number of calls amongst respondents to look at ways to further enhance Jersey’s private placement regime and revisit third country passporting, whilst respondents also pointed to the need to be more proactive in meeting the demands of and responding to the needs of an industry that is increasingly engaging on the green finance and ESG agenda.
Outsourcing is another potentially exciting opportunity – around 40% of respondents said they saw outsourcing increasing over the coming three years. But we need to find ways to change perceptions of what outsourcing is all about and how, through embracing technology and understanding risk, we can meet outsourcing demands.
...members are unequivocal – it is simplicity, ease of doing business and clarity that will resonate with fund managers and investors...
The overwhelming message, though, was that our absolute focus should be on providing clarity and simplicity in everything that we do. In a hugely complex environment, our members are unequivocal – it is simplicity, ease of doing business and clarity that will resonate with fund managers and investors, and we should not lose sight of that.
Jersey is not a volume player; we are all about service quality and standards and those, the survey suggests, will be our differentiators.
Over the coming months, we’ll be working hard to engage with industry and key stakeholders both on and off island to respond to the challenges this survey has set out, capitalise on our core identified strengths and look at ways to innovate in order to enhance our funds ecosystem.
With almost 90% of firms indicating that they considered promoters, investors and gatekeepers would give Jersey a four or five star rating, we have a good basis to start from, and with the backing of a clearly very ambitious and focused industry, we are on a good path to maintain and improve on the success we saw in 2019.