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William Byrnes (Texas A&M) tax & compliance articles

Archive for July, 2009

Winners Amongst Wealth Management Firms

Posted by William Byrnes on July 30, 2009


In my last blogticle, I discussed the Winning Strategies of the Holistic Wealth Management Service Model.  This one focuses on the winning firms within the wealth management industry.

Because the wealth management sector continues to out or evenly pace other sectors in terms of firms’ and employees’ earnings, certainly in light of the demise of some bonus schemes in the investment management business units, the sector has grown more competitive with new boutique firms entering monthly.  Is there room for such increasing competition? 

According to the Oliver Wyman Report 2008, only 50% of HNWI assets are professionally managed or advised.[1] Thus, millions of HNWI and families do not yet leverage a private wealth manager’s services!  And recall from my earlier blogticles that the global top ten wealth management firms manage less than 20% of high net wealth assets.[2]  Three types of firms in the wealth management industry have shown significant growth in the past seven years in capturing client share.

Firstly, investment team boutiques that create and manage internationally oriented transparent investment funds focusing on alternative investments, such as emerging market strategies.  These boutiques appeal to both HNWI’s directly, competing with larger institutions, and to the institutions themselves, in collaborative arrangements.  The World Economic Forum proposes that future alternative investment classes offering beta return to HNWI portfolios may include:

(1) infrastructure finance,

(2) intangible assets (such as intellectual property),

(3) research and development exposure,

(4) mega-trends,

(5) frontier markets,

(6) distressed assets, and

(7) insurable risk.[3]

Secondly, family office firms employing holistic family business and tax management and lifestyle solutions, sometimes in combination with investment management services, are making great strides in picking up HNW families.  83 US based multi family office firms managed $334 billion, which as of the third quarter of 2008 represented just 19% of total assets under management of the global hedge fund industry.[4]  However, because of the 2009 disengagement from ‘opaque’ hedge funds by HNWIs, ‘transparent’ multi family offices will likely have made substantial strides toward closing the assets under management gap.[5] 

Thirdly, local and regional banks are successfully expanding HNWI client base against the national brands.  Cap Gemini estimates that 2009 will see a 31% HNWI client growth for local/regional banks over 2008.  Polling of HNWIs indicates that the risk of institutional and financial markets stability has led them to perceive local and regional banks as comparably safer.[6]

I should mention that compliance advisory service firms that have been established to serve financial service providers have experienced phenomenal income growth from 2002 onward.  I will address more about this topic of compliance in my next blogticle.

Professor William Byrnes (www.llmprogram.org)


[1] The Future of Private Banking: A Wealth of Opportunity?, Oliver Wyman (2008) at 4.

[2] The Wealth Management Report 2009 Meeting the Expectation of UK High Net Worth Clients JP Morgan at 11.

[3] The Future of the Global Financial System, World Economic Forum’s World Scenario Series (2009) at 33.

[4] The Future of the Global Financial System, World Economic Forum’s World Scenario Series (2009) at 36.

[5] The KnightFrank (Citi Private Bank) Wealth Report 2009 at 12.

[6] Cap Gemini Merrill Lynch World Wealth Report 2009 at 24.

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Winning Strategies of the Holistic Wealth Management Service Model

Posted by William Byrnes on July 28, 2009


In my blogticle of July 19th I addressed Wealth Manager Skills Sets Required To Service New-Breed HNWIs.  Hereunder I turn to the successful strategies employed by wealth management firms to acquire and retain HNWIs and families.

My forecast for an expanding and robust sector the past years has not been drawn from the conclusion of “what doesn’t kill you makes you stronger”, though I often lecture that “the survivors shall inherit the spoils”.  Rather, I have examined the upward trend in expenditures by firms, and the sector as a whole, that allows them to the flexibility to adapt to changing climates and to evolve distinguishing services, such as the “well rounded, trusted advisors” trend required by new-breed HNWIs.

By example, for ten years I have measured that growing firms increase investment in education and information, and an increase in these two areas support that firm’s growth.  On the other hand, firms’ declining revenues, by example through loss of clients and key staff, correlate to a reduction in education and information spending.  In the 2008 poll by Robert Half’s Accountemps of 1,000 top companies, 94% offered tuition benefits to their key employees.  Naturally, this correlation begs the causation question of whether the decline in spending caused decline of revenues, the other way around, or some other factor caused both.

In support of the winners investing in education that supports a holistic service model approach, this past year Cap Gemeni reported that “While most HNWIs and UHNWIs have relationships with multiple wealth management firms, many clients seek long-term “trusted advisors” who can help them navigate complex topics and strategies.”  The trusted advisor must understand the HNWI “in the context of a larger relationship that encompasses personal and family finances as well as business partnerships or estate planning.” 

Most importantly for the employing firms of wealth managers, the Oliver Wyman study reinforced what is already generally known in the wealth management / private banking industry: the lifetime contribution value of an average private client under the European onshore model (the Advisory model) is three to four times than that earned from the US Broker/ Dealer model, while the European offshore client model – five times![1] 

The new breed HNWI will pay an asset under management (AUM) based fee for the trusted advisors holistic service, but prefers that the wealth manager employ this model dually with performance based fees – lowering the AUM fee but allowing a high blue sky for meeting and exceeding performance objectives.

Winner Wealth Managers

My wealth manager blog audience will not find the “trusted advisor” concept unique, and neither the family office that has gained so much attention amongst training companies the last seven years, as the “new” path forward.  This is the way that the most successful wealth managers members’ firms have always provided service to their clients.  Competency to offer these services has been assessed via the Walter H. & Dorothy B. Diamond Masters and Doctoral programs, or other professional association examination, such as that of the Chartered Wealth Manager of the American Academy of Financial Management (www.aafm.us).

Also, and more dear to many of my students, Cap Gemeni reported in 2008 that employing qualified talent will sharply increase because of the retirement of the baby boomer wealth manager generation.  “Bidding wars among firms for top advisors are not uncommon” and that packages will include “bonuses equaling two or three times the payouts from just a few years ago.”  As noted earlier in my blogticles, the industry career newsletter, Jobs in the Money, reports that credentialed professionals with certifications earn over 30% more than their colleagues.  Also referring to recent reports from recruiters, financial planner salaries are holding a steady range of $150,000 – $400,000.[2]  Based on my survey of recruiters and reports up to July 15, 2009, and our own alumni in the marketplace, this trend has held stable.

I look forward to addressing any comments hereunder.  Prof. William Byrnes, Walter H. & Dorothy B. Diamond International Tax & Financial Services Programs (www.llmprogram.org)


[1] The Future of Private Banking: A Wealth of Opportunity?, Oliver Wyman (2008) at 18.

[2] Headhunter Boils Business Down to Wealth Management San Diego Business Journal March, 23, 2009 at 17.

Acknowledgment of Resources

Though not attached via a citation to a specific fact or thought, the below resources nonetheless were studied in connection with the preparation of this presentation today, and may provide valuable reference for blog readers wanting more information.

 IBIS World Industry Report on Central Banking in the US, January 27 2009.

 IBIS World Industry Report on Investment Banking & Securities Dealing in the US, December 8, 2008 including recession update of January 5, 2009.

 IBIS World Industry Report Commercial Banking in the US, December 4, 2008 including recession update of Jan 9, 2009.

 IBIS World Recession Briefing: Economic Crisis: When will it End?, Dr. Richard J. Buczynski and Michael Bright, March 12, 2009.

 S&P Industry Survey: Banking, Erik Oja, Dec 11, 2008.

Posted in Wealth Management | Tagged: | 1 Comment »

Some Indian Tax Issues of Legal Process Outsourcing

Posted by William Byrnes on July 26, 2009


You must pay taxes.  But there’s no law that says you gotta leave a tip.  ~Morgan Stanley advertisement (according to quotegarden)

Attraction of Income Tax

An Indian resident’s total income includes their worldwide income “from whatever source derived.” Thus, a resident’s income need not be received in India to be subject to the income tax.  An Indian resident’s total income includes income received in India, income “accruing or arising in India,” and income “accruing or arising outside India.”[1]  The total income of a person who is not ordinarily resident in India does not include foreign source income unless the income is derived from an Indian company.[2]

The Indian government taxes some types of income based on the source of the income. Of particular importance to users of LPO services is the source-based taxation of income from a business connection in India.  A nonresident’s total income includes income received in India and income “accruing or arising” in India.[3]  Income is deemed to accrue or arise in India when it comes directly or indirectly from any business connection in India.[4]

Under Indian domestic tax law, some payments to nonresidents are subject to a non-final withholding tax. Income from sources other than royalties are subject to withholding at the current rates in force.[5]  Any person in India who has a business connection with a nonresident or from whom the nonresident receives income directly or indirectly is considered to be an agent of the nonresident.[6]

An agent is treated as a “representative assessee” of the nonresident and must deduct the tax at the source and pay that amount to the Government.[7]  However, India does not require withholding from remittances from a branch to a foreign parent.

Tax Treaty Protection

Under India’s Double Taxation Avoidance Agreements (DTAA), the business profits of a nonresident may only be taxed in India if the profits are attributable to a permanent establishment in India.  India’s DTAAs are more similar to the U.N. Model Double Taxation Convention rather than the OECD’s.

The definition of “permanent establishment” (PE) under India’s DTAAs is generally consistent with the definition found in the UN Model Convention. Included in the definition of PE is a person, other than an independent agent, who has the authority to, and does habitually conclude contracts in the name of the nonresident person.  Also included is a person authorized to, and who habitually does, keep a stock of goods for the nonresident and regularly delivers the goods on behalf of the nonresident.[8]

Business income is taxable in India if the income is attributable to a permanent establishment in India.  A nonresident person may be taxed in India even if the nonresident does not have a physical presence in India. For instance, the Income Tax Appellate Tribunal has held that nonresident companies operating reservation systems servicing Indian residents are subject to the income tax under Indian treaty law (and domestic law).[9]

India’s domestic tax law applies to nonresidents when the domestic tax law is more beneficial to the taxpayer.[10]

Recent Treaty Based Decision Impacting BPOs / Transfer Pricing Issue

In a landmark Supreme Court decision in summer of 2007 that impacted many captive LPO providers, the Court substantively agreed with the conclusion of the 2006 Authority for Advance Ruling’s determination that Morgan Stanley’s Indian BPO subsidiary constituted a permanent establishment, though the Court’s and Authority’s analysis diverged.[11]

The Court’s analysis of the permanent establishment issue focused on the oversight/quality control employees of Morgan Stanley deployed to its Indian subsidiary.  However, the inevitable question of determination of taxable income of the subsidiary whether in its own right or as a permanent establishment is answerable via a transfer pricing functional analysis.

The Court ruled that the Transaction Net Margin Method was an appropriate method for determining the arm’s length price between the associated parties.

Within the Fall Transfer Pricing course we will analyze the facts, reasoning, and criticisms of this case.

practical_guide_book

Lexis’ Practical Guide to U.S. Transfer Pricing, 28 chapters from 30 expert contributors led by international tax Professor William Byrnes,  is designed to help multinationals cope with the U.S. transfer pricing rules and procedures, taking into account the international norms established by the Organisation for Economic Co-operation and Development (OECD). It is also designed for use by tax administrators, both those belonging to the U.S. Internal Revenue Service and those belonging to the tax administrations of other countries, and tax professionals in and out of government, corporate executives, and their non-tax advisors, both American and foreign.  Fifty co-authors contribute subject matter expertise on technical issues faced by tax and risk management counsel.


[1] Income Tax Act § 5(1).

[2] Income Tax Act § 5(1) (flush language).

[3] Income Tax Act § 5(2).

[4] Income Tax Act § 9(1)(i).

[5] Income Tax Act § 195(1) and. § 194(J).

[6] Income Tax Act § 163(1)(b), (c).

[7] Income Tax Act §§ 161, 190.

[8] See e.g. Convention for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, India-Austria, Nov. 8, 1999, India Income Tax Department, art. 5.

[9] Galileo International Inc. v. DCIT, ITA No. 1733/Del/2001; 2473 to 2475/Del/2000; 820 to 823/Del of 2005 (Nov. 30, 2007).

[10] Income Tax Act § 90(2).

[11] Civil Appeal No. 2914 of 2007 arising out of S.L.P. (C) No. 12907 of 2006, M/s DIT (International Taxation), Mumbai v. M/s Morgan Stanley & Co. Inc., with Civil Appeal No. 2915 of 2007 arising out of S.L.P. (C) No. 16163 of 2006, M/s Morgan Stanley & Co. Inc. vs. Director of Income Tax, Mumbai.  See Jefferson VanderWolk’s interesting commentary at 47 TNI AUGUST 13, 2007, P. 631.  Email me for copies of the decision and lecture notes thereto.

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Risk Management of Important Issues of LPO

Posted by William Byrnes on July 23, 2009


Quote for this blogticle: “First weigh the considerations, then take the risks.” Helmuth von Moltke

In my last blogticle I listed the types of LPO services undertaken with a link to over 100 providers of LPO services.  Hereunder I address several important considerations concerning avoiding the sinkholes in the road to outsourcing. 

Attorney Ethical Issues

In 2006 the New York City Bar Association published a formal opinion regarding the ethical considerations of overseas legal outsourcing of services.  The New York City Bar considered whether a New York lawyer may “ethically outsource legal support services overseas when the person providing those services is (a) a foreign lawyer not admitted to practice in New York or in any other U.S. jurisdiction or (b) a layperson?”[1]  That bar association concluded that a lawyer may do so, upon meeting the following conditions (quoted from its opinion)[2]:

(a) rigorously supervises the non-lawyer, so as to avoid aiding the non-lawyer in the unauthorized practice of law and to ensure that the non-lawyer’s work contributes to the lawyer’s competent representation of the client; (b) preserves the client’s confidences and secrets when outsourcing; (c) … avoids conflicts of interest when outsourcing; (d) bills for outsourcing appropriately; and (e) … obtains the client’s informed advance consent to outsourcing.

Early last year, the Florida Bar Association addressed the same issue and it found no distinction between hiring contract paralegals in the US and contract foreign (specifically Indian) attorneys outside the US, concluding that contractual legal services do not aid the unlicensed practice of law if the Florida law firm provides adequate supervision.[3]

Security

The legal and operational issues that perhaps attracts the most attention, and deservedly so, because of a few highly publicized cases, are privacy, confidentiality and the preservation of privilege.  These issues require a robust discussion of operational data security, institutional / LPO governance, and employee security as well as quality control for processes and compliance verification.

By example of addressing security concerns, outsourcing contracts mitigate the disclosure of documents by mandating the LPO employees’ computers have Internet access limited.[4]  Note that in India anyone with access to customer records is free to sell the data, or use it for direct marketing.  However, pending legislation (the Personal Data Protection Bill, 2006) will if passed protect data provided to the Government and private entities from being sold or used for direct marketing.

Professional Indemnity

By example of addressing professional indemnity and security liability concerns for which the US contracting source firm will inevitably be liable to its clients, LPO contracts may mandate professional liability coverage written by US based insurers, with a certificate of coverage provided annually.[5]  Naturally, heightened insurance and compliance/verification will increases the LPO firm’s operational costs, pressuring its margin and pricing.

Functional Equivalency & Education / Training

While India may have four times the amount of law graduates, are these graduates the functional equivalent of a US associate?  One of my colleagues poses the question that if the Indian graduate attorney was the functional equivalent, then why doesn’t his and other firms, like the technology industry, import Indian trained lawyers?  While it is not uncommon for United Kingdom trained solicitors to be employed by US firms, the same cannot be said of Indian graduates. 

Is the equivalency up to par with US paralegal training?  How can a US firm verify professionalism and level of expertise?  More importantly for the LPO industry, if components are missing in India’s legal education that impact functional equivalency, what are these components and can these be effectively transferred? 

By example, many India law graduates do attend one-year Master of Laws in the United States.  Is the LL.M. necessary to rectify any (perceived) differences?  Will staff’s passage of the penultimate multistate bar examination, by example in Washington DC, New York or California, provide Indian LPO firms competitive advantage to obtaining work, or disadvantage because the (now US) attorney may command a higher wage?

Some LPO providers state that as long as a Indian based U.S.-trained lawyer oversees the Indian staff, the work product will be of equivalent quality.  Because of the recent recession in USA legal services, the US has an ample supply of attorneys willing to relocate to India to oversee such operations.  May a US firm consider this supervision sufficient for certain contracted skill sets, such as document review?

As a counterpoint to this equivalency issue, some LPO marketers state that Indian law graduates are better, rather than equivalent, to their US associate counterparts, by example, because of the competitive motivation of the number of Indian graduates and fewer high paying attorney positions.

In my next blogticle, I will examine some tax issues associated with LPO with India.

Professor William H Byrnes, IV (www.llmprogram.org)


[1] The Association of the Bar of the City of New York Committee on Professional and Judicial Ethics, Formal Opinion 2006-3, August 2006.

[2] The Association of the Bar of the City of New York Committee on Professional and Judicial Ethics, Formal Opinion 2006-3, August 2006.

[3] Professional Ethics Of The Florida Bar (Opinion 07-2); January 18, 2008

[4] Legal Outsourcing to India Is Growing, but Still Confronts Fundamental Issues, Anthony Lin, New York Law Journal, January 23, 2008.

[5] Legal Outsourcing to India Is Growing, but Still Confronts Fundamental Issues, Anthony Lin, New York Law Journal, January 23, 2008.

Posted in Legal Process Outsourcing | Tagged: , , | 2 Comments »

Types of Indian Legal Process Outsourcing (LPO)

Posted by William Byrnes on July 22, 2009


Quote for this blogticle: “Most people are other people. Their thoughts are someone else’s opinions, their lives a mimicry, their passions a quotation.” Oscar Wilde

In my last blogticle I looked at Conditioning Drivers for LPO Growth.  In this one, I turn to the types of LPO services undertaken and a link to a provider list.

Types of LPO Services

Examples of legal services currently outsourced with substantial fees to India include, non-exclusively:

(1) secretarial including presentations,

(2) legal transcription,

(3) legal publishing services,

(4) document review including e-discovery,

(5) legal research,

(6) business/market research,

(7) litigation support,

(8) contract drafting and review services,

(9) form completion and information population, such as tax forms

(10) intellectual property, such as patent application and compliance, and

(11) administrative such as accounting and billing.[1] 

Type of LPO Providers

The four categories of Indian outsource providers typically referred to are:

(1)     captive centers of corporate legal departments,

(2)     captive centers of large legal and audit firms,

(3)     third party niche providers, and

(4)     third party multiservice providers.[2]

LPO Expertise Legacy

Especially given the mass layoffs amongst large firms, the US law community is experiencing a high attrition among its US contract attorney staff, as well as its partners and associates.  On the contrary, India experiences a high retention, thus legacy experience, amongst its LPO providers. 

Moreover, LPO proponents state that Indian LPO multiservice providers may be leveraged by their US counterparts to (1) reduce fixed staffing costs of associates and paralegals, (2) mitigate the capital investment and IT operational costs necessary for purchasing, implementing, and keeping abreast of, legal technology for document review, and (3) cross-fertilization obtained form experience with multitudes of varying projects.[3]

List of LPO Providers

The website Prism Legal provides a vendor list of 111 firms providing outsourced legal service in India and elsewhere for the US and UK markets.[4]  

The Prism Legal list also includes corporations and law firms leveraging legal offshore services, such as Dell, American Express, Dupont, Puarolator Courier Inc., General Electric and Microsoft, as well as top law firms such as Clifford Chance, Allen & Overy, Millbank Tweed, Jones Day, Kirkland & Ellis, White & Case; and Chadbourne & Parke.[5]

In my next blogticle, I will turn to the Risk Management of Important Issues of LPO.  Look forward to your comments to any of my blogticles.  Professor William Byrnes (www.llmprogram.org)


[1] Offshoring Legal Services to India: an Update (Market Research Report), Valuenotes Database Pvt. Ltd., July 2007.  Also see Why and What Lawyers Should Consider Outsourcing, Ron Friedmann LLRX.com, Sept 1, 2008 (available at http://www.llrx.com/features/legaloutsourcingoptions.htm).

[2] Contract with India: Legal outsourcing, Jim Middlemiss, Financial Post (Canada), April 25, 2008.

[3] Why and What Lawyers Should Consider Outsourcing, Ron Friedmann LLRX.com, Sept 1, 2008 (available at http://www.llrx.com/features/legaloutsourcingoptions.htm).

[4] http://www.prismlegal.com/index.php?option=content&task=view&id=88&Itemid=70#Intro (last visited October 30, 2008).

[5] Also see Contract with India: Legal outsourcing, Jim Middlemiss, Financial Post (Canada), April 25, 2008; U.S. firms outsource legal services to India, Cynthia Cotts and Liane Kufchock, Bloomberg News, August 21, 2007; and India Lures Corporate Outsourcing, Jonathan Hill, Law Technology News, October 14, 2008.

Posted in Legal Process Outsourcing | 4 Comments »

Conditioning Drivers for Legal Process Outsourcing Growth

Posted by William Byrnes on July 21, 2009


Conditioning Drivers for LPO Growth

The previous blocticle post addressed the market for LPO and BPO in India relative to the USA.  Hereunder we shall address the cost structure that is driving the LPO market and its transfer of transactional based legal services to functional equivalent yet substantially lower cost practitioners.

Litigation Costs

For medium size businesses, legal fees as a percentage of income are growing.  In 2007 electronic data discovery expenditures increased 43% to $2.7 billion and are projected to reach $4.6 billion by 2010.[1]  A recent Fulbright & Jaworski client study found that approximately 10% of the clients responding reported legal fees represented about 5% of the company’s gross annual revenues.[2] 

The recession has greatly impacted legal services, in particular client’s willingness to pay substantial fees for traditional associate and paralegal level work.  This, firms have been driven, sometimes specifically by clients, to legal process outsourcing (LPO) in India.

Compliance Costs

The Regulatory Environment [3]

For the past several years, the US banking industry and its legal/audit counsel has focused on regulatory issues, such as the corporate governance provisions of the Sarbanes-Oxley Act (enacted in 2002) and the banking-related parts of the USA Patriot Act (enacted in 2001). These provisions are having a bottom line impact in terms of increasing expenditure resulting primarily from increased staffing and technology.  The provisions of the USA Patriot Act require increasing investments in technology (though many in the industry have questioned the effectiveness of these investments in preventing the funding of terrorist groups or activities) and staff hours that smaller community banks have contended impact them disproportionately.  

Increasing Compliance Costs

Senior banking management perceives rising and unpredictable compliance costs that undermine US global competitiveness as the most significant threats to the future growth of banking.[4]  The cost of AML compliance increased around 58% globally but 71% in North America between 2004 and 2007.[5]

A 2005 survey of Florida, in particular Miami, banks engaged in international banking estimated the staffing cost of AML compliance at nearly $25 million. The study concluded that compliance costs are not uniform across institutions, even after making adjustment for sizeLarger institutions (measured in terms of deposits) typically devote more resources and spend more on compliance than smaller ones, of course, but the compliance burden does not rise proportionately with size.  That is, survey data indicates that economies of scale in compliance are present, and that compliance costs per dollar of deposits is greater for smaller institutions than for larger ones.[6] Even after the dramatic increases in compliance costs and regulatory complexity since 2001, the regulatory environment is likely to become increasingly challenging in coming years.

In a 2006 Economist Intelligence Unit survey, international senior bank executives were asked about the costs of compliance with government regulation. When asked what changes they expected in the regulatory environment over the coming three to five year, over 91% stated that they expected regulations affecting their institution to grow in complexity and breadth, 88% stated that compliance with industry regulations will become more onerous, and 81% reported that they expect penalties for non-compliance to increase in severity.[7]

As a result, the international banking industry in Florida has been characterized by consolidation and contraction since 2000.  The number of foreign bank agencies operating in Florida fell from 38 in 2000 to 31 in 2005.[8]  There were 10 Edge Act banks operating in Florida in 2000, but only 7 in 2005.  The number of international banking employees (in foreign agencies, Edge Acts and the international divisions of domestic banks chartered in Florida) declined from 4,660 in 2000 to 3,027 in 2005.

Based on a survey of banks significantly engaged in international banking Florida International Bankers Association (FIBA) was able to estimate the Florida international bankers staffing cost for 271 full-time employees of anti-terrorism/anti-money laundering compliance at nearly $25 million in 2005. [9]  The average survey respondents indicated that it devoted 2.9 FTE employment positions to BSA/AML compliance in 2002 versus 6.8 FTE positions in 2005. The number of full-time employees devoted to compliance represented 9% of the workforce in 2005.  Staff resources devoted to compliance increased by 160% between 2002 and 2005.

Document Review & Customization Costs

In 2003, a legal forms publisher, Socrates Media, reduced the cost for a fifty state customized residential lease from approximately $400,000 to $45,000 via the Hyderabad company QuisLex.[10]

A company’s legal department can reduce its document review costs from $7 to $10 per page in the US to approximately $1 per page with Indian counsel.[11]  Whereas New York associates undertaking document review may earn a $160,000 base annually, similarly reviewing Indian associates earn less than $10,000.[11]  Contrast the annual increase of labor supply of 200,000 Indian law graduates (of a 1.2 billion population) versed in the Common law to that of the USA, being 50,000 for 300 million population.

 A US legal secretary’s average hourly cost is $63 under the realistic conditions of 80% annual time utilization ($50 if 100% hourly utilization) based upon an $85,000 annual employee cost including salary, benefits, and payroll tax.[13] That of the New York associate will be double. In 2003, University of California (Berkeley) reported that whereas US paralegals and legal assistants may average $18 hourly, the equivalent India positions earn between $6 and $8.[14]

In our next blogticle we will address areas best suited for legal process outsourcing.  You may follow new blogticle postings via Twitter (http://twitter.com/williambyrnes).  Feel free to comment.  Professor William Byrnes (www.llmprogram.org)


[1] India Lures Corporate Outsourcing, Jonathan Hill, Law Technology News, October 14, 2008.

[2] India Lures Corporate Outsourcing, Jonathan Hill, Law Technology News, October 14, 2008.

[3] Standard and Poor’s Industry Surveys: Banking (Dec. 6, 2007).

[4] The Washington Economics Group, The Economic Impacts of International Banking in Florida and Industry Survey: 2005.

[5] KPMG’s Global Anti-Money Laundering Survey 2007.

[6] The Washington Economics Group, The Economic Impacts of International Banking in Florida and Industry Survey: 2005.

[7] Economist Intelligence Unit, Bank Compliance: Controlling Risk and Improving Effectiveness (2006)

[8] In 2005, however, 7 of the 31 international banks had no deposits booked in Florida, while in 2000 only 2 of the 38 had zero deposits.

[9] Note that these cost estimates only include manpower or staffing costs, and do not include costs such as transaction monitoring software, possible IT investments and services, legal counsel and similar support.

[10] U.S. firms outsource legal services to India, Cynthia Cotts and Liane Kufchock, Bloomberg News, August 21, 2007.

[11] Offshoring Legal Services to India: an Update (Market Research Report), Valuenotes Database Pvt. Ltd., July 2007

[12] India Lures Corporate Outsourcing, Jonathan Hill, Law Technology News, October 14, 2008.

[13] Why and What Lawyers Should Consider Outsourcing, Ron Friedmann LLRX.com, Sept 1, 2008 (available at http://www.llrx.com/features/legaloutsourcingoptions.htm)

[14] Outsourcing the lawyers, Krysten Crawford, CNN/Money October 15, 2004; Outsourcing Legal Services Abroad, K. William Gibson, Law Practice Magazine Volume 34 Number 5 July/August 2008 Issue Page 47.

Posted in Legal Process Outsourcing | Leave a Comment »

Legal Process/Service Outsourcing Focus on India

Posted by William Byrnes on July 20, 2009


This week I will break from wealth management and turn to a series of blogticles on legal process / service outsourcing to India.  The blogticles will present an overview of issues relating to the discussion held in our Masters course (see www.llmprogram.org).  Whereas our course also addresses our groundbreaking technology and pedagogical developments for educating the Indian legal process outsourcing workforce, within this blog we will focus on basic outsourcing issues such as types of outsourcing, compliance, and two tax issues being (1) India source based taxation / permanent establishment considerations, and (2) transfer pricing considerations. 

I will provide citations to relevant sources that you may jump start your research for legal process outsourcing for India.  Please contact me if you require more detailed suggested resources to continue you research.

Economic Comparison: BPO and LPO Growth

Since 1994 I have observed, and participated in the rise of technnology, business, service, and finally legal process outsourcing.   Originally I leveraged South African accountants for service fullfillment for projects overseas, transferring information via the Internet.   Many South African accountants immigrated overseas, and India’s bandwidth grew stable and robust enough that its labor force could be effectively leveraged.  Fees in India generated from USA sourced legal services are estimated to increase to $640 million within the next two years, employing 32,000 legal staff (from $146 million employing 7,500 in 2006, and only $80 million in 2005).[1]  In the past three years, legal outsourcing revenue has grown approximately 60% annually.[2]  From just 2006 to 2007, growth of US companies outsourcing legal services to India increased from 37% to 51%.[3]  By 2015 Forrester Research projects $4 billion in legal services outsourced to India. 

By contrasting example, last year India’s IT outsourcing revenues reached $64 billion, growing 33%, and breached the two million employment level.[4]  As Indian has accomplished phenomenal growth since 1994 with its BPO information technology sector, so it is likely to in the BPO legal services sector though as a much faster pace.

My Background Relevant To Legal Process Outsourcing

In 1994-95, I was a senior consultant for a significant non-resident Indian acquisition of an India manufacturer, requiring leveraging of the Mauritius double tax agreement and working with Mauritius and Indian tax and exchange control authorities.  In 1996, I followed up that experience by outsourcing to India a substantial text capture project in agreement with Kluwer Law International for the creation of HTML hyperlinked online materials for our online law program.  Since 1995, I have spoken numerous times in India at conferences and trainings held by organizations such as the Bombay Management Association and for Bangalore’s charted accountants.  Last year the All India Federation of Tax Practitioner invited me to address its membership on legal education for Indian tax process outsourcing.  Recently I co-authored the Indian chapter for Oxford University Press’ treatise Global E-Business Law & Taxation (distributed electronically through www.ibls.com).

Prior to my tenured academic career I was a senior manager then associate director, international tax, Coopers and Lybrand (South Africa), which subsequently amalgamated into Price Waterhouse, whereby I sourced multinational structuring and investment projects, completing the work cost effectively for the clients via competently educated South African advisors. 

In the next blogticle, we turn to examine the issues of Litigation Cosst, Compliance Costs and Document Review & Customization Costs.

Prof. William H. Byrnes, IV (www.llmprogram.org)


[1] Offshoring Legal Services to India: an Update (Market Research Report), Valuenotes Database Pvt. Ltd., July 2007 and Legal Outsourcing to India is Growing, but Still Confronts Fundamental Challenges, Anthony Lin, New York Law Journal, January 2008. – see Mittal – NASSCOM

[2] U.S. Legal Work Booms in India, Rama Lakshmi, Washington Post Foreign Service, May 11, 2008.

[3] India Lures Corporate Outsourcing, Jonathan Hill, Law Technology News; October 14, 2008.

[4] Indian IT-BPO Industry Factsheet, NASSCOM, August 2008 (available at http://www.nasscom.in/Nasscom/templates/NormalPage.aspx?id=53615).

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Wealth Manager Skills Sets Required To Service New-Breed HNWIs

Posted by William Byrnes on July 19, 2009


There is a correlation amongst a firm’s and professional’s economic success, the firm’s regulatory survival, a holistic education with international exposure, and collaborative service models.  Servicing modern HNWIs who now demand international elements and risk management for their families and their business interests requires a dynamic ability to obtain economic and regulatory information, understand the clients’ and the markets’ issues and inefficiencies, and create solutions. 

As noted in my previous blogticles, steady HNWI high growth continues within the OECD members, but rapid growth in HNWI numbers will continue in the BIC countries of Brazil, India and China, and probably again after the valuation adjustment in Russia/Eastern Europe.  The BIC countries, in particular Brazil because of its vast natural commodities base and recent discovery of what is probably the world’s largest offshore oil field, will continue to lead the world in both economic and HNWI growth.  Cap Gemini estimates that by 2011 Asia Pacific will overtake North America in HNWI growth, just as China overtook the UK last year in total number of HNWIs.  Thus, wealth managers seeking to attract these HNWIs, be in their home country, or in the USA, will evolve to provide services reflective of the needs of these BIC clients, as well as speak their local languages.

The HNWI is seeking the one-stop shop model.[1]  The relationship manager must be able to source information and services leveraging a team approach, assimilate the pieces, and communicate it in a collaborative, transparent manner with the HNWI .[2]  Wealth mangerss must be able to employ a holistic and collaborative team approach for a HNWI including (1) business, (2) tax, (3) estate, (4) legal, (5) accounting, (6) intra-family governance, (7) philanthropy (8) compliance and (9) lifestyle issues, and communicate operations and solutions to the HNWI and family members.[3]  New breed HNWIs want communication by email weekly from their wealth manager.  Sophisticated advisors will leverage secure, though inexpensive, video conferences to establish more efficient and effective face time.

By example of collaboration and communication skills, the trusted advisor may need to source compliance and due diligence skill sets from risk management, compliance, legal, and audit team members in order to analyze a multinational business that a HNWI is targeting, synthesize the different jurisdictional regulatory requirements, and communicate effectively the team’s findings to the client via a video conference. 

Thus, education in these aforementioned skill sets, leading to a potential employee’s retooling, is a key to competing in today’s wealth management industry and job market.  Moreover, ‘soft skills’ such as client communication, and even more relevant in this economic downturn, the ability to counsel through economic and personal stress, will decide for HNWIs who is to become trusted advisors, and who are simply hawking services.[4]  A polling by American Academy of Financial Management of its membership found that while communication soft-skills are recognized by wealth managers and by private clients themselves as critical to attracting HNWIs and in choosing their trusted advisors, less than 20% of wealth managers receive any formal soft skill communication education during their graduate education, which mainly focused business or finance (lawyers primarily responded that communication skills training had formed a part of their formal education).  MindFrame Persuasion www.mindframepersuasion.com/ is an example of advanced soft skill communication training to establish attraction and connection between trusted advisor and their prospective HNWIs.

In my next blogticle, I will address Winning Strategies of the Holistic Service Model.   Prof. William Byrnes (http://www.llmprogram.org)


[1] The Wealth Management Report 2009 Meeting the Expectation of UK High Net Worth Clients JP Morgan at 5.

[2] The Future of Private Banking: A Wealth of Opportunity?, Oliver Wyman (2008) at 43.

[3] In an interview with Dr. George Mentz, Chairman of the American Academy of Financial Management (www.aafm.us), who is consulted by the Department of Labor’s Bureau of Statistics for Financial Services employment information (http://www.bls.gov/oco/ocos259.htm), he stated that the US wealth management market has seen a commoditization of financial product offering to private clients, thus requiring advisors to distinguish themselves upon other services.  Asset protection, estate planning, business issues, Dr. Mentz said, are areas that advisors are now focusing on to attract clients.  The Chronicle of Philanthropy reported that 2008 charitable giving did not substantially suffer, and in some cases increased amongst certain groups (112% amongst the 50 most generous US philanthropists).

[4] See The Wealth Management Report 2009 Meeting the Expectation of UK High Net Worth Clients, JP Morgan at 11 and the section “Perspective” page 25.

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Trends of New-Breed HNWIs

Posted by William Byrnes on July 18, 2009


From 2006, Cap Gemini’s polling has identified several long term trends that continue to appear to drive a general re-allocation and opportunities for wealth managers to acquire clients.[1] By example of asset re-allocation, in 2006 HNWI clients reached 20% alternative investment diversification for their portfolios, up from just 3% in 2000.[2] HNWIs, and in particular the new breed HNWIs, are increasingly globally informed about investment opportunities and risks.  Thus, HNWIs are undertaking their own research of information and expecting a collaborative process with their advisors.  HNWI’s are demanding firm’s investment teams develop and use global strategies and products to hedge local risks[3], by example allocating to the continuing emerging markets of BRIC (though 2009 has seen this become BIC).

As to be expected based upon the short term drivers of the recession, recalibration of asset values, failure or quick-sale of numerous global financial institutions, and tremendous investment fraud scandals by prominently respected institutional individuals, 2009 has seen tactical, if not forced, re-allocation.  Ellen Kelleher in April reported in the Financial Times that HNWI are commonly dissatisfied with private banks pitching structured products “with high charges and confusing terms”.[4] Citi Private Bank’s survey covering its wealth managers for 2,000 HNWI and UHNWI found that this year almost 90% of their clientele have reduced or substantially reduced their exposure to equities and nearly all have shied from hedge funds, citing transparency and stability as the value drivers of their allocation decision.[5] While in 2008 HNWIs sought income fixed returns, the World Economic Forum proposes that future alternative investment classes offering beta return to HNWI portfolios may include (1) infrastructure finance, (2) intangible assets (such as intellectual property), (3) research and development exposure, (4) mega-trends, (5) frontier markets, (6) distressed assets, and (7) insurable risk.[6]

Since 2006, new breed HNWIs in particular have been trending toward a lack of fidelity to their institutions and migrating sizable allocations of their portfolios to boutique (investment) firms and to multi family office operations.[7] 27% of HNWI surveyed in 2008 by Cap Gemini noted changing wealth mangers or withdrawing assets.[8] In the previous year, Cap Gemini already noted that HNWIs were migrating toward a holistic service approach to their advisement.  Nearly 70% of advisors that retained their HNWI leveraged team-based models.  American Academy of Financial Management (www.aafm.us) reports that wealth managers not employing an intergrated-service, collaborative approach to their clients’ issues during the recession have experienced tumbling fees as clients transferred to advisors able to address such issues.  By example, AAFM reported that few financial advisors pro-actively collaborated to draw into their team recessionary skill sets such as debt renegotiation, cash flow and workout strategies.  Scorpio Partnership’s Transforming the Worth of Wealth report found from its surveying that the general feeling amongst financial advisors is that investors are increasingly looking to transfer to service-based smaller boutiques as the economy weakens. In fact, HNWIs are returning to smaller regional and local financial institutions (Cap Gemini reports a 31% increase in their client base).

Exemplifying the impact of this trend, Scorpio Partnership reported that the 25 brand name firms surveyed “posted less than 15 per cent growth in clients every three years, on average”.  On the other hand, as of the third quarter of 2008, 83 US based multi family office firms managed $334 billion, which at that time represented 19% of total assets under management of the global hedge fund industry.[9] Based on the 2009 disengagement from ‘opaque’ hedge funds by HNWIs, ‘transparent’ multi family offices will likely have made substantial strides toward closing the assets under management gap.[10] When choosing from among wealth managers, HNWI apparently value branding and reputation, but size has lost its importance.[11]

In my next blogticle, I will address the new required skills sets of wealth managers required by new breed HNWIs, at least as we teach them in our wealth managers’ training programs.   Prof. William Byrnes (http://www.llmprogram.org)


[1] All the reports cited herein addressing trends amongst HNWIs confirm the original trend recognition by the 2006 Cap Gemini Report.

[2] Cap Gemini World Wealth Report 2006.

[3] The Wealth Management Report 2009 Meeting the Expectation of UK High Net Worth Clients JP Morgan at 38.

[4] The Big Money Prefers Smaller Firms, Ellen Kelleher, Financial Times (April 10, 2009).

[5] The KnightFrank (Citi Private Bank) Wealth Report 2009 at 12.

[6] The Future of the Global Financial System, World Economic Forum’s World Scenario Series (2009) at 33.

[7] Show them the Money, Economist Special Report April 2, 2009.

[8] Cap Gemini World Wealth Report 2009.

[9] The Future of the Global Financial System, World Economic Forum’s World Scenario Series (2009) at 36.

[10] The KnightFrank (Citi Private Bank) Wealth Report 2009 at 12.

[11] The Future of Private Banking: A Wealth of Opportunity?, Oliver Wyman (2008) and The Wealth Management Report 2009 Meeting the Expectation of UK High Net Worth Clients JP Morgan.

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Observations About the State of the International Financial Services / Wealth Management Industry

Posted by William Byrnes on July 17, 2009


In my 900-page economic report on the international financial services industry, I examined and calculated the economic size and impact of the sector on local jurisdictions, and in doing so reviewed the global industry as a whole.[1]  But for periods of global financial crisis, the sector had experienced double-digit annual global growth from the eighties and contributed robustly to the local economies and society.  Since 1998, the international financial services sector client base has expanded nearly 10% on average.  Even with the dampening of current global crisis, this industry is projected to grow in the high single digits.

During this period, the number of HNWI clients have more than doubled, to just over 10 million, as have their assets, from $17.4 trillion to between $40 and $50 trillion.[2]  By 2013, the pool of HNWI clients’ assets will grow another 50% to nearly $60 trillion.[3]  70% of this new wealth is self-generated, either through entrepreneurship or via executive level employment, representing a “new” breed of HNWI versus the inherited wealth clients of the past.[4] 

Since 1998, while the OECD continues to steadily generate HNWIs and their wealth, the substantial jumps in wealth generated and new HNWsI is and will continue to occur in Asia (China and India) and to a lesser extent in Latin America (Brazil) and the Middle East (GCC).  Based on the shifting geo-wealth creation pool, our new breed HNWI is more likely to be of Asian, Middle Eastern, and Latin American nationality, with a very different frame and perspectives from our OECD HNWI.  In 2008, China jumped the United Kingdom with the 4th largest number of HNWIs (364,000), while Brazil has climbed over Spain to 10th position (with 131 HNWIs).  Cap Gemini estimates Asia Pacific to overtake North America in HNWI growth in just two years.

The average HNWI, excluding the value of primary residences and collectables, is worth more than $4 million!  HNWI’s continue to leverage offshore skill sets, growing their assets from $5.8 trillion from 1998 to an estimated $8 to $11 trillion today.[5]  That $11 trillion under management represents, at combined fees for all wealth management services of just 1%, approximately $100 billion accrual to wealth management firms and their providers, such as asset management and investment banking business units.[6] 

The wealth management industry remains very fragmented, with likely even greater fragmentation on the horizon.  The global top ten wealth management firms manage less than 20% of high net wealth assets.[7]  50% of HNWIs do not even leverage the expertise of a wealth manager![8]  Thus, this expanding, fragmented client base leaves plenty of room for growth in employment.  Currently, the international-offshore financial service industry’s wealth management level employment has probably reached and maintaining 100,000.[9]  By example, the AIMR (aka CFA Institute) and the American Academy of Financial Management (http://www.aafm.us) both estimate over one-million employment globally for their segmentation of financial analysts (based on their respective global spread of their 100,000 members each).[10] 

The current stability with wealth management employment is in contrast to the instability in investment banking.  Investment banking within the USA, including securities dealing, employment has fallen from a high of 156,113 in 2006 to a low of 97,500 in 2008, though is estaimated to be stabalizing this year at 100,425.[11]  Financial planning and investment management services are now delivering a larger portion of an institution’s income, up to 12% from 5% in the late 1990s, as investment bank services and trading commissions have correspondingly fallen.[12]

Prof. William Byrnes (http://www.llmprogram.org)  

 


[1] Report on the Economic, Socio-Economic, and Regulatory Impact of the Tax Savings Directive and EU Code of Conduct for Business Taxation upon Selected Offshore Financial Centers as well as a Competitiveness Report for Selected Offshore Financial Centers (Foreign Commonwealth Office 2004).

[2] Cap Gemini Merrill Lynch World Wealth Report 2008 calculates $40.7 trillion.  However, see Oliver Wyman’s The Future of Private Banking: A Wealth of Opportunity? (2008) at 9 wherein using its own wealth model and reliance upon data from the OECD, IMF, WFE, UNECE, national banks and stock exchanges calculates $50 trillion.

[3] Though the global re-calibrating of asset values may impact the nominal wealth value for HNWIs in the short term, historically, based upon both the recessions coined after the Asian Financial Crisis and the Tech-Bust, the wealth value will likely return to projected levels with a two-year lag.  While equity and real estate markets may have declined by January 2009 by as much as 50% of their highest value in OECD countries, HNWI portfolios are spread among other investments without such a sharp plunge.  A reliable decline in value estimate for HNW is 25% based upon the decline experienced in Switzerland, which accounts for 28% of the global asset management market.  See the report Wealth Management in Switzerland, Swiss Bankers Association (2009) at 8.

[4] The Future of Private Banking: A Wealth of Opportunity?, Oliver Wyman (2008) at 21.

[5] Tax Haven Abuses: The Enablers, The Tools and Secrecy” (Sen. Rep., Perm. Sub-Comm. On Investigations, August 1, 2006) and World Wealth Report 2008 estimate $11 trillion.  However, the Oliver Wyman Report which surveyed 25 top firms provides a lower estimate of only $8 Trillion offshore at 16% of HNW assets (see page 3) and the Swiss Bankers Association Wealth Management in Switzerland 2009 report (see page 4) supports this lower estimation.  A general survey of literature, by example IMF and World Bank reports, contrasted with data available from the Bank of International Settlements, has been inconclusive.

[6] Note that the $100 billion estimate based upon the $11 trillion base may be an exaggeration of fees earned from offshore HNWI, the application of the 1% fee base is supported by the Senate Report 2008 at page 86, wherein it states that UBS earned $200 million on its $20 billion under management from its 19,000 non-compliant clients (i.e. 1%).

[7] The Wealth Management Report 2009 Meeting the Expectation of UK High Net Worth Clients JP Morgan at 11.

[8] The Future of Private Banking: A Wealth of Opportunity?, Oliver Wyman (2008) at 4.

[9] With regard to the offshore employment estimate, see by example my 2004 Report, and the 2009 Swiss Banking Association report at 10. A survey of reports and articles written up until April 10, 2009 finds that the wealth management industry has NOT suffered the significant job losses as a whole as the financial services industry has.  By example, see Headhunter Boils Business Down to Wealth Management San Diego Business Journal March, 23, 2009 at 17 wherein a recruiter states “When times are good, services such as money mangers and financial advisers tend to get overlooked, but in tough times, customers are more inclined to professional help.”

[10] See CFA® annual report regarding its estimate, or the US Department of Labor Bureau of Statistics website (http://www.bls.gov/oco/ocos259.htm) that leverages data from the American Academy of Financial Management .

[11] IBISWorld Industry Report: Investment Banking and Securities Dealing in the US (Dec. 8, 2008) at 7.  (Updated Jan 5, 2009).

[12] IBISWorld Industry Report: Investment Banking and Securities Dealing in the US (Dec. 8, 2008) at 9.  (Updated Jan 5, 2009).

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Wealth Management Trends: Are You Positioned For the Frame Shift of the Next Decade?

Posted by William Byrnes on July 16, 2009


This first short ice-breaker presentation of a multiple part series will serve as a resourceful backdrop upon which to embark upon our exploration of the coming “frame shift”, for those of you familiar with neuro linguistics, regarding what attributes are necessary for a wealth manager to successfully compete and attract high net wealth individuals and families  (“HNWIs”) in this coming decade – just six months away.   The inevitable conclusion of the intensive research including a survey from 1998 to June 2009 of all industry based reports, both independent, examples including IBIS and S&P, and internal, examples being Merrill Lynch Cap Gemini and JP Morgan, is that this decade has seen a global HNWI requirement shift from what is coined the USA (a.k.a. broker-dealer, transaction-based) model to the European (a.k.a. advisory service, fee-based) model.  Basically, HNWIs want a holistic wealth management services approach and are willing to pay for it.   If you are tooled for collaborative advisory delivery required by example for family office counsel, you will make more money.  If not, well, employment is a Darwinian marketplace.

In the past decade, the number of global high-net-worth individuals (HNWIs) served by practitioners, such as my able graduates, has doubled to more than 10 million by 2008 (though the global financial crisis has caused a decline to less than 9 million) —and their assets have more than doubled from $17 trillion to at least $40 trillion (just under $33 trillion currently as the crisis matures).  The average HNWI, excluding primary residences and collectibles, is now worth more than $4 million! In the next four years, the pool of HNWI client assets is projected to grow to nearly $50 trillion.  (Though the global re-calibrating of asset values may impact the nominal wealth value for HNWIs in the short term, historically, based upon both the recessions coined after the Asian Financial Crisis and the Tech-Bust, the wealth value will likely return to projected levels with a two-year lag.)

The new-breed of HNWI are the majority of the nearly double-digit HNWI increasing fold who are no longer being knighted via wealth transfers but instead are earning this status upon developing their own fortune via business and investment acumen.  The systemic iceberg that in the first quarter of 2008 gouged our Titanic and lead to the inevitable sinking of many titans of the economy is commonly projected to have completely melted in the first quarter 2010.  However, the impact of our Titanic to wealth management is that new-breed trends that first surfaced in 2006, have been accelerated according to the most recent studies (December 2008 through April 2009).  These trends now clearly show a lack of institutional fidelity by HNWIs, as well as the desire for strategic allocation that includes leveraging international investments, and finally the demanding of trusted planner relationships that are holistically and dynamically approached.

Moreover, another development that has shaken institutional fidelity both for the government and for HNWI the past year regards the acknowledgement in Congressional testimony (and the subsequent prosecutorial agreement) that UBS had not complied with its qualified intermediary agreement regarding approximately 19,000 (the most recent figure exceeds 52,000) non-tax compliant US HNWIs of its total of 20,000 US HNW clients.[1] It is widely reported that UBS is not the exception as regards this situation.  The consequence of the prosecutorial agreement is that inevitably, whether through declaration by UBS or via the latest IRS amnesty program, no less than 19,000 HNWI worth (as of June 2008) $17.9 billion, and by a extrapolation estimate using a rounded multiple range of five to ten, 100,000-200,000 USA HNWIs worth $100 – $200 billion (before taxes, interest, penalties, and tax claw back for last year’s losses) will be swimming ashore over the next twelve months.  Based upon Forbes billionaire Igor Olenicoff suit against UBS, this class of HNWIs’ institutional fidelity has been permanently severed.

The good news is that those of you holding the Master and Doctorate from the Walter H. & Dorothy B. Diamond Graduate Program (http://www.llmprogram.org) are the best positioned to compete for these new-breed HNWI.  This blog over the coming weeks will examine the frame shift and identify the corresponding opportunities to successfully compete for these HNWI clients.  Over the coming weeks, as I post the follow up parts (another ten sections) I will share with you at least two strategies from my out-of-the-box thinking and perspectives that I am known for on your preparation for the new-breed HNWI.


[1] Tax Haven Banks and US Tax Compliance, Staff Report, Permanent Subcommittee On Investigations, United States Senate (2008).

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President Obama’s International Tax Proposals in a Policy Context

Posted by William Byrnes on July 15, 2009


http://law.lexisnexis.com/practiceareas/Insights–Analysis/International-Tax/President-Obamas-International-Tax-Proposals-in-a-Policy-Context

Faced with growing pressure to close the rapidly increasing budget deficit, President Obama outlined a series of proposed changes to the international tax system. The plan is touted as ‘levelling the playing field’ and filling tax loopholes that allow U.S. corporations operating overseas to avoid U.S. income tax.  This peer reviewed ten-page article available on LexisNexis’ Tax Law Center explains some of the more important aspects of the proposals, firstly applicable to corporations and secondly to individuals, that will impact deferral and international financial centers (tax havens).  After explaining the practical impact, the article examines the affect of the proposals in a policy context (considering the efficiency principle in a deferral reform analysis).

You will find further information on these topics at http://www.llmprogram.org

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What is an Expert? part 1 of 4

Posted by William Byrnes on July 15, 2009


Vodpod videos no longer available.

more about “What is an Expert? part 1 of 4 “, posted with vodpod

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