Wealth Solutions & Wealth Planning
A generational mind-set to servicing family wealth
Shanker Iyer of Independent Financial Advisor
Jun 21, 2016
Planning for the future requires a sense of the past. Now, more than ever, it also needs expert knowledge of the constantly-changing regulations in tax, in law and in structures which will lead to effective implementation. This is the approach that Shanker Iyer takes in spearheading The Iyer Practice.
There has always been a tension between tradition and innovation. The challenge for advisory firms today is understanding how to deliver a service that can respond to what clients want and what regulators demand.
But tax is not really important compared with the underlying realities.
That means wealth management advice should go first to clients and then think forwards to how the structures – which include trust, fiduciary and compliance – can work for future generations.
Shanker Iyer is in a unique position to look in both directions. He is the founder and chairman of Iyer Practice, a specialist advisory firm, and has been grooming his two sons, Sunil and Sanjay, to see things in a similar way.
Evolving proposition
Iyer qualified as a chartered accountant in London and was a partner of a leading accounting firm in the UK for more than 10 years before he returned to Singapore in 1993.
The accountancy background is important because it provides the fundamental tools for any business model. The advisory role has been the story of a different evolution. “I came to Singapore in the 1980s with my UK firm,” explains Iyer, “and I went back to the UK in 1992. But then the UK economy wasn’t very good and so we came back and set up in 1993.”
Initially he worked a traditional accounting practice. “We are chartered accountants by qualification and that’s been my experience, so it continued to be the case for the initial period.”
But accounting and audit were not the ways into the future. “In the end the audit business in Singapore was declining because of the law abolishing audit for many companies in the future, and so we decided to exit that business.”
There was personal and professional logic in deciding to move into advisory. “We felt professionally that we preferred to do that sort of work,” he explains. “Audit was getting over regulated and stopped us providing many other services to clients which otherwise we wanted to.”
That was the game changer. “We divested our audit business at that time and we basically switched ourselves to advisory business,” says Iyer. “We suddenly became a very different firm in town.”
Today, Iyer Practice is very different from any other accounting practice, and also from any trust company which typically does not give advice.
“The trust companies tend to do fiduciary work and the accounting firms are largely audit focused,” he adds.
Finding a niche
That evolution has given Iyer Practice the unusual position it now holds with fruitful relationships across financial services, including in the wealth management industry.
“We became something in the middle,” explains Iyer. “Accounting firms don’t regard us a competitor, and, in fact, many of them consult us on tax matters which are quite complex and beyond their experience.”
The same business model applies to trust companies. “They play a more volume game and we are more advisory; that’s the way we focus the firm.”
That focus is emphatically towards clients. Iyer Practice’s clients are basically in the private client field.
They may come through corporate structures but, behind these companies, even public listed companies, there are usually families, entrepreneurs and high net worth individuals who want more personalised service.
“They are very demanding in the quality of work and depth of knowledge that they require from us,” says Sunil Iyer, director, overseeing private client services and regulatory compliance.
New landscape
Knowledge and understanding of trends are becoming ever-more important in advisory work.
As governments around the world have been looking at how they can get more tax revenue, it has become increasingly difficult to develop strategies which can respond to changes which may be coming.
The three most impactful developments where advisers must be up-to-date on their knowledge and analysis are: Base Erosion and Profit Shifting (BEPS – an OECD project), a new view of defining where sales and profits and tax liabilities are declared; FATCA; and the Common Reporting Standard (CRS), the use of automatic exchange of different sorts of tax information.
Shanjay Iyer, who leads the firm’s tax practice, takes a common sense view of all these things.
He thinks BEPS will affect business, but not too much. He is also sanguine about FATCA. “I suppose it was very much the American thing.”
CRS, meanwhile, is different and will be much more widespread, he explains, because it affects everybody.
Whether all countries that have signed up will implement it will be an interesting case because everybody is waiting for the next country to do it first.
Keeping it simple
In general, The Iyer Practice prefers to stick to basics.
Businessmen can make multi-million dollar decisions in two minutes, but when it comes to their personal lives (family succession planning, wealth planning) they cannot simply decide because they must think of all the things that can go wrong – and often do.
“People say, it is just an off the cuff thing, but I am saying, rationally, I just feel that there is no one formula that seems to work for anybody,” says (Shanker) Iyer.
“Each family is different, the way they do things is different, and the solutions are different, so we try case-by-case to work with them and give our inputs to their decisions. But it is personal the way they decide to do things.”
At the end of the day, he adds, it is their decision how they do things because they know their family situation better.
The role of the adviser is also different today. “They will ask for the inputs and then they make their own decisions,” says Iyer.
Inevitably, he and his family have a big influence on the firm’s culture. “I guess being a family business we don’t have the type of turnover at the senior level that other firms might have.”
A four-generation family of chartered accountants does have a certain flavour.
“There are firms who have much more resources than we would ever have to do things, so we have to know our place in the market and not try and compete head-on with anyone bigger than us; it doesn’t make sense. So we have a niche play and we are very happy in it.”
No standing still
Iyer Practice now has offices in Singapore, where it has close to 70 staff, and in Hong Kong, with 15 employees. But Iyer is still looking for growth.
“Areas that we find the most interesting now in terms of activity are international tax and regulatory services. International tax is an ongoing process because we get inquiries.”
There is still more to do and to contemplate. For example, one development at the firm was its relationship with WTS, the fifth largest German tax consulting firm after the big four, with an international network. The upshot was dealing with some high-level tax issues of German multi-nationals that are doing business in Asia, in turn helping Iyer and his team to grow the firm because it had to bring in expertise that was in need.
“The relationship was a start but it also gave a further impetus to the culture and growth of the business,” he explains. “It actually forced us to build up our team much more than we ever would have done. So we are happy about that.”
At the same time, Iyer is a strong believer in tradition and relationships. He has been president of the British Chamber of Commerce, the European Chamber of Commerce and the International Chamber of Commerce, as well as chairman of the Singapore International Fiscal Association, and chairman of the Tax
Committee of the Singapore International Chamber of Commerce.
This doesn’t mean cronyism. “I do not mean that they do favours to us, but the fact is we know how the system works and we know the people personally,” he says.
"We think people get a certain comfort and they come to us because we are not new in town and experimenting. We are established here.”
Things do change but so does the firm, he adds; tempora mutantur, nos et mutamur in illis.
Iyer concludes: “We want to be focused on our strategy. So we don’t see much change. The type of work could change, it might become more complex, but I think the better we get the better we can advise our clients.”