Singapore and Asia Powering Growth within Global Financial Services Firm the Sovereign Group

The Sovereign Group is today one of the world’s largest privately owned consultancies specialising in the provision of trusts and companies and associated international tax advice, boasting more than 500 people across some 20 jurisdictions. Chairman and Founder Howard Bilton has been a regular in our Hubbis ‘pages’ for some years and a steadfast and insightful contributor to a good number of our thought leadership events. This time, we ‘met’ up with Andrew Galway, who since 2010 has been the Managing Director of Sovereign Singapore. He told us how the Singapore business was riding a wave of wealth management and family office expansion, and as a result is looking to rapidly build out the talent pool, while at the same time hunting for acquisitions in Singapore or Hong Kong, and possibly further afield.

Andrew opens the discussion by remarking on the ever-growing needs for advice on increasingly sophisticated structuring. “Clients have high-value complex requirements today as it is very complicated now to setup structures, not only the tax structuring but the legal issues, cross-border issues, local and global reporting requirements, which are ridiculously complicated, and so forth.”

He explains that Sovereign works with specialist law firms, especially around CRS, which he observes is ostensibly simple but when mixed in with complex structures becomes remarkably difficult to navigate. “Very few people can really get their heads around the numerous tentacles and implications of CRS,” he says. “And despite being a professional services firm with more than 500 people across 20 countries, here in Singapore, which is such an entrepot and hub for great wealth, we need to work on almost every case now hand in hand with experienced tax, legal and investment professionals to deliver a coherent solution.”

An enhanced proposition

He says this approach has proven highly successful for the Singapore operation he oversees.

“Average corporate services firms here might think they can handle a Variable Capital Company and all the ramifications, but actually, they cannot, in fact they would not usually have a clue on how to set it up or administer it. But we can bring in different skills and partners, from bankers to lawyers and others, to help us optimise and really add value for the clients.”

He explains that structures and vehicles for wealthy clients have numerous purposes and implications and need to be devised and administered with an eye on the last – for example the tax history – and on the future, for example as part of robust estate, succession and legacy planning. “Business and family governance is also central to the proposition, and of course everything nowadays has an international aspect, so we need to coordinate the right advice across different jurisdictions, and we are long-established experts at doing exactly that,” he explains.

Education: a catalyst for better outcomes

Another element that Andrew highlights is the effort to boost understanding and transparency through education to help the clients analyse exactly what they are doing and why. “A key challenge for us as a firm is to help people understand the different options, the trusts, the other structures, and then help make the solutions relevant and comprehensible to the family,” he expounds. “And our relationship is a very personal one with these clients. We do not succeed only on price and technical ability, but at a personal level, making sure we communicate, and we bring in the right experts to help them and the right people that they can connect with.”

He explains that understandably since the pandemic hit, many families have had both more time and a greater impetus to structure their affairs more robustly. “An advantage of being an independent trustee is that we have the objectivity and capability to help clients structure their assets 100% rather than just focusing on their private banking assets, and we are expert at assembling the right teams.”

Singapore as a magnet for global wealth

He says that the Singapore operation today handles a lot of international and multinational type clients, which is an increasingly attractive jurisdiction through which to structure client affairs.

“Singapore as we know has got great and growing appeal for the international entrepreneur looking to move into Asia, and Sovereign is particularly well positioned to help international businesses looking to move into the region,” he states. “Singapore’s appeals as a family office and asset management centre are well documented, and there is a significant need for the type of services we offer.”

Andrew offers some insights to some of the more interesting projects they handle. He cites the case of a Japanese family, with the patriarch based in the US, one son in Japan, another son in Singapore, and which was seeking the right solution to transition the sons into the family business and to take over the estate.

Cases and challenges

“Japanese inheritance tax is amongst the most punitive in the world,” he reports. “So, we have structured a compliant and viable solution with the help of experts in different locations and comprising structures here and a life insurance wrapper constructed out of Switzerland. The result is a clear succession and legacy plan that works for all the parties.”

Another case he refers to involves some Indian business partners in the US technology sector who need help structuring their Intellectual Property from the US for global licensing. “The team we put together for this involved Indian tax advisors, US tax attorneys, and local Singapore advisors as the structure will be here, it was a fascinating challenge. Aside from these complex cases, we have simpler but still complex assignments for a wide variety of clients, recently for example a Philippine client with family in UK and Australia. In all of these cases, the right teams both in terms of capabilities and characteristics are essential to the right and optimal outcomes.”

The Sovereign Group – a Snapshot

According to documentation from the Sovereign website, Sovereign opened its first office in Gibraltar in 1987 and has since grown into one of the largest independent corporate and trust service providers in the world. They currently manage over 20,000 clients that include companies, entrepreneurs, private investors or high net worth individuals and their families – and have assets under administration in excess of USD20 billion.

Sovereign Corporate Services provides company formation and management in all major jurisdictions, together with comprehensive advice and support to assist companies of all sizes to establish and sustain operations successfully in foreign markets – from full back-office solutions to assistance with tax and regulatory compliance. This includes accountancy, human resources, pensions, insurance, trademark and intellectual property protection, obtaining local licences and permits and executive relocation.

Sovereign Private Client Services provides secure, efficient wealth and succession planning to internationally mobile families and entrepreneurs. They specialise in the design and implementation of structures, using trusts, foundations, companies and funds, to hold and protect assets and investments. Additional services include asset management, accountancy, foreign property ownership, retirement planning, residence and immigration, insurance, yacht and aircraft registration and management.

And Sovereign Retirement Planning provides retirement solutions that offer choice, transparency and portability across multiple jurisdictions. Their reputation for excellence in pension scheme administration and the record of innovation and technical expertise have, the website explains, propelled Sovereign to become a market leader in the transfer and provision of international pension schemes. When combined with the technical knowledge of our in-house specialists and qualified actuaries, this means that Sovereign can cater for any alterations to a member’s situation over time.

Sovereign has built a network of offices or agents in all major international finance centres. This global reach enables them to provide local expertise with an international dimension, whilst allowing clients to access a global service from a local point of delivery. They hold the requisite licenses in all key jurisdictions from which they operate.

Corporate services plus

He adds that Sovereign does more and more corporate services work out of Singapore, as well. “There is the plain vanilla type of corporate work, and then more interesting areas such as how to handle the substance requirements, how to deal with the director positions, residency, holding companies and their assets, and their cross-border entities and connectivity, as well as then handling the double-tax agreements and so forth,” he explains. “These days, without substance you cannot get tax residency, and without that you cannot get access to proper double-tax treaty and full compliance, and that can be a problem for people that want to use Singapore as an investment holding company jurisdiction.”

He adds that a core element of his role is also to join the boards of some of these companies and help them to expand in the region. As part of his role as the MD for Sovereign Management, he has been asked by corporate clients to represent them on the board of their Singapore subsidiaries. In that capacity as a professional director, Andrew has overseen various trading operations as well as companies that have holding activities investing in Indonesia, Singapore and Thailand.

“When making my decisions as a director for these businesses, I apply my own judgement but may from time to time consult legal and accounting resources within the Sovereign Group,” he explains. “I have been here 12 years now and know this market and the region pretty well and can identify the key challenges and provide solutions, or at least the right guidance. And with the pandemic still going on, this type of support and trust for many such clients is invaluable to them and their families and business partners.”

A bite-sized project

He offers the example of some Australian investors establishing a dental manufacturing business in Indonesia, with equipment coming in from Germany, through Singapore. “I am on the board of that company and have been helping them structure and expand, and such arrangements and assignments have become a major part of our business in the past couple of years especially. We go well beyond the typical passive type of director role for new arrivals and foreign entities establishing themselves here. We offer a far more comprehensive role at the core of the businesses and help with genuine substance, and we then apply our experience and knowledge to properly supporting these businesses in their local and regional expansion.”

Key Priorities

Mission number one is to build the single-family office proposition and suite further. “This is a key market for us these days,” he reports, “and we have been building out the suite of services around this, anything from the establishment and ongoing running of these operations to succession planning solutions and so forth. This is a dynamic and rapidly expanding sector.”

The second priority is to enhance the operational efficiency, move entirely to a Cloud based ‘paperless’ operation and ensure complete client privacy and cyber-security. “This is a huge project and a major investment that we are in the middle of,” he comments.

And he also wants to expand, which means more people and the right people, and across all elements of the business. “We need people in every one of the teams, and we are also looking at acquisitions of similar types of companies across Singapore and Hong Kong, mirroring the types of services we offer globally. We are in the midst of a fairly chunky acquisition to be announced later in the Middle East, where we will be significantly expanding our operations, we have already done deals in places like Gibraltar and Portugal. Here in Singapore, we want to grow rapidly if we can find the right acquisition. We are certainly actively on the lookout.”

Rapid growth continues

He closes by commenting that the Singapore office is currently one of the most profitable and fastest growing entities within the Sovereign Group. “We are moving fast, the wind is in our sails, this is an exciting time to be in this role here, and there is plenty of growth to come,” he says.

Getting Personal

Andrew Galway comes originally from Edinburgh, and later studied Business Administration at Greenwich University in London. Today he is the Managing Director Sovereign’s Singapore office, one of the world’s largest privately owned consultancies specialising in the provision of trusts, companies and associated international tax planning. Prior to joining Sovereign, Andrew worked in Wealth Management in the UK (both in Edinburgh and London) and overseas in Barcelona, where he started his own firm. “I came into contact with Sovereign’s Gibraltar office during my time in Barcelona, so that is how the relationship began, and our fit has been ideal,” he reports.

He is married with two children aged five and two, and outside of work and family time, he exercises in the gym and open air in the heat of Singapore. Travel is still very difficult, but he holds out hope for some future trips to Mauritius where Sovereign has a significant office, and to South Africa, where Sovereign has a sizeable office in Cape Town. “For now, we can but hope that the course of the pandemic turns more optimistic, and things come back to some normality,” he concludes.