Where are we going in the current climate?
By Prof. Robert Anthony, Anthony & Cie
European Property in the residential sector sales seems to have slowed down substantially. Whilst London and Paris as well as other capitals still seem to be selling, it is much harder to obtain finance. This results in a diminution of volume. Certain prime assets remain in demand and the purchasers obviously are better protected due to their liquidity.
In many places home owners are managing to hold their prices, but one can see for those needing to sell have to accept negotiations on prices. However, there are always exceptions, especially at the top end.
The banking crisis has created a very difficult arena for private banks. Margin calls increased interest rates on renewals and clients being asked to leave are common occurrences today. Investment strategies are being policed by the banks especially on charged assets. The problems of conflicts of interest and corporate governance, whilst understood, are weighed in accordance to the considered risk liability and are often ignored. This is especially seen in banks that are multi-tasking in order to vacuum up the maximum revenues. Litigation and responsibility have not been costed into their margins, nor has the issue of money laundering. However, now private banks go overboard to avoid personal liabilities often unnecessarily turning down good clients. Somewhat worrying in this current environment, is where government and European legislation needs to resolve this greed and total disorder.
The sovereign debt crisis that was created by speculators, press, and indecisive long government decisions has caused investors to accept low returns. The focus on corporate debt and pressure of tax increases as well as Basle three have taken liquidity out of corporations and squeezed private clients, reducing banking facilities and corporate investments. The musical chairs of political parties being punished by this crisis, whether they are good or bad policies, has formed new governments voted in with draconian fiscal policies often ill adapted to create growth.
To where does all this lead? The considerable changes in tax treaties and personal and corporate taxation in all countries necessitate a review of one's global assets, their structure and current strategy. A debt costing more than investment gains is easily realisable. An illustration is treasury yielding near to 0 and debt costing 4 %. A review of pension and the investment and fiscal strategy is important, as is reviewing estate planning which should not be ignored. With all the recent changes, accountants and lawyers should be teaming up with wealth managers to protect their clients. Oh! And incidentally this should not exclude you. I recently made substantial savings by taking my own medicine.
Independent advice, alongside the private bank, working with expert professional advisors is not only useful but the savings could substantially outweigh the costs.
Prof. Robert Anthony
Anthony & Cie
T: +33 4 93 65 32 23
Professor Robert Anthony is an independent member of GGI (Geneva Group International), which has a global alliance of independent leading law, accounting, audit, management consulting and trust firms. Within GGI, Robert Anthony chairs a practice group of "International Wealth Management, Private Equity and Estate Planning".
Professor Anthony is a Chartered Certified Accountant (UK) and Certified Financial Planner (France). He is a Professor of International Tax Law at the Thomas Jefferson School of Law in San Diego, California. He is also the Principal Partner of Anthony & Cie, an international Family Office based in France, with offices in Sophia Antipolis (near Cannes) and in Paris.