The business of client relationship management is in a process of significant evolution. International regulation, taxation and compliance requirements are becoming increasingly complex, while clients simultaneously become more global in their outlook. Companies, investors and families are branching out, both into new geographies and new areas of activity. In this context, the need for a joined-up global approach to client service – ensuring requirements are understood and efficiently met across multiple teams, service segments and jurisdictions – is greater than ever before.
Funds go global
Take the case of an institutional client setting up a fund and special purpose vehicles (SPVs) across multiple jurisdictions. There could be, for example, an Irish corporate structure with a Luxembourg fund vehicle sitting over it, as well as subsidiaries located in the UK and Cayman Islands. Such a client clearly has an overarching need for a single point of contact who can guarantee complete oversight of the global project. Local teams are crucial from a compliance and in-depth expertise perspective, but the client ultimately requires the firm assurance that diverse teams are speaking to one another under the supervision of a trusted individual or key team who will ensure that the various pieces of the puzzle come together seamlessly to make up one cohesive, bigger picture.
Institutional investors are also diversifying their fund geographies, as evidenced by FDI flows showing a massive global shift in recent years. The recently released Word Investment Report 2019 reveals that, while total global foreign direct investment (FDI) has dipped, developing countries accounted for a record-high 54% of global FDI in 2018. FDI flows to Africa, in particular, rose by 11%, while greenfield project announcements in Asia doubled in value. As funds move their global portfolios around, institutional investors need the stability and support of a one-point contact who can take on the burden of ensuring that their widespread activities are understood and connected as necessary.
Private wealth becomes increasingly mobile
Furthermore, as the quantum of global wealth continues to rise, we are increasingly seeing clients’ requirements extend into new service areas. For example, we might have a successful entrepreneur who, having previously utilised company structuring and outsourced administration services, is now also looking for help to preserve their self-made wealth and plan for family succession. Equally we could have an established ultra-high-net-worth (UHNW) family seeking to launch a high-impact philanthropic fund, or achieve greater international diversification in their investment assets. This invariably involves the set-up and establishment of investment/asset holding and succession vehicles across multiple jurisdictions.
Wealth-X’s World Ultra Wealth Report 2018 forecasts that the global UHNW population will rise to 360,390 people by 2022; an increase of 40% compared with 2017. Moreover, the level of UHNW wealth is projected to increase to US$44.3 trillion, implying an additional US$12.8 trillion of newly created wealth over the next five years. Interestingly, Wealth-X anticipates that wealth will not only spread globally from established strongholds in North America to rising economies in Asia-Pacific, but that UHNW individuals themselves are likely to become increasingly mobile.
Corporate clients are looking for a global ‘helicopter’ view
The corporate sector, too, is exhibiting signs of a global evolution. The world’s largest multi-national enterprises (MNEs) according to the UNCTAD classification play a prominent role in employment, sales and assets in the countries in which they operate. As outlined in a paper published by the European Central Bank, the foreign activities of these firms are impressive even when compared with some nation states. The top company for employment abroad has 800,000 employees, which is larger than Estonia’s total labour force, while the foreign sales volume of one of the most prominent automotive corporations is equivalent to the annual GDP of countries like Greece and Portugal. Further, the foreign assets held by the largest oil company are close to the annual GDP of economies such as Ireland and Colombia, and the market capitalisation of one of the most prominent ICT corporations is on a par with the GDP of Argentina.
Thus, corporate giants setting up their operations across multiple jurisdictions clearly have their work cut out in terms of keeping their fast-expanding businesses seamlessly connected and integrated across diverse geographies. At this stage, in supporting such clients as they expand or restructure their global operations, it is crucial to adopt a global client management approach and deliver a ‘helicopter’ view of services provided. Taking this approach is a boon for the client as it provides one go-to person or team at their disposal and they do not need to worry about looking into the nitty gritty of what is happening in a specific location; thereby freeing up time and energy to plan their next big move.
A global approach to client management
In light of the changing environment, successful, future-proof service providers are those able to deliver a consistent, efficient and personal client service on a global scale. The way forward, in our view, is for firms such as ours to provide a global manager for each such relationship, who can serve as a much-needed liaison point between the client’s different activities and geographies and manage the overall relationship.
This single, crucial resource will liaise with the diverse geographical units of their client’s operations to help them maximise growth opportunities and deploy resources efficiently to meet an emerging challenge head on, with different locations working as a unified whole under his or her expert supervision. Crucially, this approach also fosters the development of long-term, mutually rewarding relationships based firmly on knowledge and trust.
Towards a new horizon
As the activities of entrepreneurs, wealthy families, corporate organisations and institutional investors grow in scope and complexity, service providers must be ‘fleet of foot’ in capitalising on the opportunities to support their clients and cement their existing relationships. The most successful service providers in our industry will be those that are primed and ready to mirror their clients’ evolving needs with a comprehensive, holistic and, most importantly, personal approach.