Technology was supposed increase leisure time and decrease work. Neither turned out to be true. So what happened? Democratization of information is what happened. Information and services that were reserved in the past for those with the proper connections or, more importantly, the wealth, are now available, en masse. This has created another problem. Now there is too much information.
Nowhere has this been more evident than in financial services. First-time investors right through to high-net-worth individuals now have access to the latest research into portfolio theory, tax minimization planning and investments from around the world. Today you can log on to the Internet and find the latest bid/ask on a stock you hold, read about a unique tax planning opportunity and then read the sections of the Income Tax Act it refers to. So how do you find the time to sort all of this information, let alone put it to good use? Bayshore Bank & Trust is trying to solve that dilemma so clients can focus on more important issues such as family, work and even play. “Bayshore was initially designed to provide uniquely tailored services for high-net-worth individuals while at the same time using technology to make those services available to expatriate clients as well,” says Penny Ettinger, Managing Director of Bayshore. Indeed, it is rather ironic that Bayshore uses technology to help clients sort through the barrage of information — that was created by technology. But ability to use technology for this purpose is possible in large part because of Bayshore’s background. Bayshore Bank & Trust, a Barbados chartered bank, is the offshore legacy of a 35-year-old Canadian firm. The Bayshore Group of Companies is a consortium of enterprises focused primarily on financial services and leading edge technologies for the world’s largest financial institutions. This includes Bayshore Bank & Trust (Barbados) Corporation, which was licensed in 1996. From the beginning Bayshore Bank & Trust has focused on using the technological expertise of the Bayshore Group of Companies to provide exclusive private banking and very personalized and expert service to sophisticated clients and expatriates around the world. Bayshore employs what it calls “A philosophy of understanding the client, their objectives and their goals in life.” “Traditional banks, fund companies and trust companies create product and then push that product at their target market,” says Maurice Fortier, Vice President, Investment Services, at Bayshore. “The latest example was the vast number of tech funds created in 1999 to take advantage of the tech craze. The focus is on creating a product that will sell. For Bayshore,” Fortier, continues, “the focus is on the end goal of the client and subsequently on what needs to be done to achieve that goal. Do they need advice on residency issues? Do they need sophisticated tax planning? It is really more a process we take our clients through as opposed to selling a product.” This process includes a detailed profile of each client, designed to learn as much as possible about who the client is and what type of service is required. Providing a service specific to each client also depends on a well established presence in the international tax and investment communities, says Ettinger. “With clients located around the globe we have to keep up to date with the changes in tax, residency and immigration issues. As Bayshore has evolved, key contacts have been developed in other offshore jurisdictions around the world as well as in the Middle East, Europe and North and South America.” To serve the investment needs of clients, Bayshore has teamed up with major financial institutions such as Salomon Smith Barney, Frank Russell and Julius Baer. “Technology enables us to bring the best investment management services to our clients,” says Fortier. “We are able to bring our clients investment services based on the expertise and research capabilities of these world class providers.” With these partnerships Bayshore is able to monitor more than 1,200 investment managers around the world, and actively tracks approximately 400 of them. Knowing the top performers has proven to be invaluable for Bayshore’s clientele. While Bayshore does provide services that allow clients to manage their own portfolios, the focus is on privately managed money. “Most of our expatriate clients are so busy juggling their jobs, the adaption to a new culture and the pressures of moving their families — investing their own portfolio is just not an option,” says Fortier. The two main investment management services provided by Bayshore are the Segregated Investment accounts, available for clients with at least $1 million (U.S.) to invest, and Integris Funds, a Cayman Islands-based family of private investment pools for clients with between $50,000 and $1 million. The Segregated Investment program is designed to provide clients with a portfolio that best suits their particular investment style and risk profile. This is accomplished by constructing portfolios based on detailed investor profiles of the clients. Once the appropriate asset mix is chosen for a particular client, the next step is to find appropriate investment managers. Bayshore seeks out the best institutional investment managers from around the world for their particular skill in a specific asset class or investment style. With this approach to investment management, Bayshore is able to provide clients with a completely objective portfolio. If one of the managers chosen by Bayshore for their expertise in a particular asset class happens to deviate from their style or has a significant change in personnel, they will be reviewed and likely replaced with another manager. While the technology revolution has empowered investors by giving them more information than professional investors had only a generation ago, in reality, investors are unable to develop these type of portfolios on their own. To do so they would have to:
These may seem to be relatively simple requirements, but to achieve them investors must surmount two challenges: the challenge of scale and the challenge of complexity. The root of the scale problem lies in the fact that there are more than 22,000 registered Investment Advisors worldwide, a fourfold increase over the past ten years. The research required to identify the appropriate investment managers — let alone the proper asset allocation and style allocation — is usually beyond the capacity of individuals, or even committees, who are not investment professionals. Where clients do want to be more actively involved, Integris Funds may be the solution. Integris funds are not offered on a retail basis and thus avoid the constant client turnover that is endemic with retail funds and which affect their returns. Bayshore employed the same criteria as in the Segregated Investment program to choose investment managers from around the world for each of the 22 different Integris Funds. The process is also similar in that a detailed profile is developed for the client and a customized asset allocation is created using Integris Funds. However, clients can also choose one of seven pre-determined asset allocation models if they choose not to go through the investment profiling process and want to make some of their own investment choices. In all cases, whether clients choose Integris or Segregated Investment, a detailed portfolio proposal is constructed first for clients to scrutinize. This proposal becomes the road map that guides both Bayshore and the client. It is used to measure how the portfolio is performing, relative to the risk and return goals, and how it is performing relative to the stated timelines. In the end, the road map Bayshore as a whole is trying to follow should lead to that elusive dream of more leisure time and less work. “Just creating new technology does not necessarily enhance our lifestyles,” says Ettinger. “Using it to one’s best advantage is the key. Simply put, that is what we are doing at Bayshore”.
Wayne Grant is Vice President, Investment Management, Bayshore Bank & Trust (Barbados) Corporation. He may be contacted at: |
