Every cloud has a silver lining and, after the traumas experienced during last year's SARS outbreak, many people now admit that it prompted them to make some long overdue changes. Thoughts turned to planning more carefully for future financial security and, in particular, investment options structured as trusts began to attract a new level of interest. As a result, the position and responsibilities of trustees have steadily become better understood and their importance more widely recognised.
"There is definitely a new way of looking at the role of trustees and asset management in general," says Katherine Chiu, a director of MeesPierson Intertrust (Hong Kong) Ltd. "People are now prepared to discuss subjects like inheritance, which were previously regarded as taboo, and realise the need to seek professional advice in planning for the security of their families."
The company is a wholly owned subsidiary of Fortis Bank and provides corporate and trust services through forming and incorporating business entities for clients. They also act as trustees to legally manage assets and properties from which designated parties derive benefits, and advise on the most effective structures for holding trust fund investments.
"We saw a surge in enquiries about setting up trust accounts in the second half of 2003 when people realised how transitory life can be," says Ms Chiu. "These came from all sections of the community as investors sought better ways of protecting their assets and noticed there were secondary advantages in terms of more efficient tax planning."
Strike a balance that works satisfactorily for the client, the beneficiary and the trustees
Despite this current growth, Ms Chiu acknowledges there are still comparatively few trust providers in Hong Kong. "It is a niche industry and professional trustees need to be familiar with several disciplines," she explains. "They must understand law, taxation, finance and accounting in order to provide comprehensive advice for clients." Graduates with work experience in any of these fields, or as company secretaries, are regularly targeted for entry-level positions. At present, however, the demand for qualified individuals continues to outpace supply.
Besides this, the most challenging issue encountered by the trustee business in Hong Kong and on the mainland is that of how to change traditional thinking. "On the whole, Chinese people are reluctant to give up control of their assets and properties," says Ms Chiu. "This can make them initially less receptive to the concept of a trust. Therefore, our task is often to convince customers of the long-term benefits and strike a balance that works satisfactorily for the client, the beneficiary and the trustees."
It is not necessarily easy but does mean Ms Chiu has a job where every day brings something unexpected. "You never get bored as a trustee," she smiles. "You deal with clients from different backgrounds who have diversified assets and varied investment objectives. Every case requires a different solution and you must be able to put yourself in the client's shoes to analyse exactly what is best for them."
After graduating with a degree in company administration, Ms Chiu started out with an accounting firm in the area of corporate services and moved into the specialist field of trust services with MeesPierson Intertrust in 1990. Since then, she has completed a further diploma in offshore trust and estate management offered by the Society of Trust and Estate Practitioners (STEP), which complements her extensive practical experience.
She highlights strong interpersonal and communication skills as the main qualities needed by a trustee officer plus problem-solving abilities and common sense. "Very often," she says, "clients suggest something which may not be legally possible. It is up to us to meet their basic objectives while respecting fiduciary duties." Ms Chiu also mentions the importance of patience and a willingness to listen. "Clients are usually thinking about how best to arrange things for the benefit of their families, so you should be prepared to hear their personal stories as part of the planning process," she says.
Accession to the WTO means that China's financial services industry will open up further and provide a host of new opportunities. "Trust legislation was only recently introduced in China," says Ms Chiu, "and we predict many wealthy mainlanders will explore investments structured as trusts to protect their assets and enhance tax efficiency."
To gear up for expansion in the mainland market, MeesPierson Intertrust this year opened offices in Shanghai and Guangzhou providing corporate services. "This is a way of getting a foot in the door as we prepare for the anticipated fast growth of the trust market in China," Ms Chiu explains.