Eight years after Maseco Private Wealth was set up in London to look after American expatriate clients, and following years of in-house research into the Asian market, a Hong Kong Maseco outpost has opened its doors.
Below, Helen Burggraf talks to Mark and Ashley Scher, the American couple who have been tasked with launching the operation, about how it’s going, and their plans for the business…
When James Sellon, Joshua Matthews and two others founded a wealth management business in London in June of 2008, to cater specifically to American expatriates living there, no one could have foreseen how timely their launch of Maseco Private Wealth would prove to be.
As it happened, they opened their doors just three months before New York’s Lehman Brothers bank collapsed, in what was to come to be seen as the start of what everyone would soon be referring to as the “global financial crisis” of 2008.
Nevertheless, they were ideally positioned to take advantage of the subsequent upheaval in the American expatriate world that would follow the 2010 introduction of FATCA.
FATCA, of course, was signed into law by President Obama in an effort to curb the use of offshore accounts by Americans to avoid their US tax obligations, by forcing non-US financial institutions to report in detail to the IRS on any American clients they had on their books. Almost immediately, these non-US financial institutions stopped accepting American expats as clients, just as these Americans were needing help with their finances more than ever before.
Today, as they open their long-planned Maseco outpost in Asia, Sellon, Matthews, and the two experienced Maseco team members they have dispatched to Hong Kong to oversee the new office say their timing is again proving to be auspicious.
“Even as recently as 2014 – well after FATCA had already taken hold – few people out in Asia believed that it was ever really going to impact on them,” explains Mark Scher, one of the two Maseco directors who are now running Maseco Asia Ltd, out of an office on Queensway, in Hong Kong’s Admiralty district. (The other director is his wife, Ashley, pictured with him, above; like him, she joined Maseco’s London team in 2010.)
“Everyone who was working in the area of wealth solutions out here – they just didn’t see it,” Scher, who is speaking to International Investment from Maseco’s Hong Kong base, says, of FATCA’s impact on American expatriates and their investments.
“They are starting to now, though.”
Maseco Private Wealth
Scher has been coming out to Asia on Maseco business since 2012, visiting Singapore, Hong Kong and other countries as he sought to “get a bead on what would make the most sense for us as a firm, looking towards expansion out here”.
Hong Kong made the most sense as an initial base, he says, because it has one of Asia’s largest American expatriate communities – numbering around 50,000, including many Chinese-Americans – and because it’s well positioned to look after Americans who live or do business in mainland China, of which Hong Kong is officially a “Special Administrative Region”, following the former British colony’s “Handover” in 1997.
Also, he says, as a market for expatriate Americans, Hong Kong has “a very similar profile” to London, where Maseco originated, and where it perfected its business model.
Both cities, for example, are major world financial centres, and therefore attract significant numbers of expat American bankers and financial services executives.
This is different from, say, the Philippines, another Asian market which is technically home to significantly more American expats than Hong Kong – something close to 350,000, according to Scher, although it varies – but because those numbers are largely due to several American military bases there now and in the past, it tends not to have as many of the specific type of client Maseco is accustomed to catering for.
“A condition of our Hong Kong licence is that our clients must have a minimum of HK$8m in assets, or roughly US$1m, to invest,” Scher explains. Technically, Maseco Asia Ltd is operating in Hong Kong as a discretionary fund manager, under a so-called Type 9 license from the Hong Kong Securities & Futures Commission.
Although HK$8m/US$1m may be less than some of the US private banks typically require of their American expat clients in Hong Kong, Scher adds – FATCA having made American expats worth having as clients only if they’re rich, because of the compliance burden they place on financial institutions – US$1m is thought to be more than the average US expatriate in the Philippines is likely to have.
At the same time, like Hong Kong, the Philippines attracts a fair number of American expatriates who move there for non-military reasons, including to run businesses or, in the case of Philippine nationals who have worked for years in the US and taken on US citizenship, to retire there. Mark and Ashley Scher say it’s therefore one of a number of key Asian markets they are already looking at with interest.
“Right now the focus is on Hong Kong, but we are already getting calls from [American expats] in many of the surrounding countries,” says Ashley, noting that in addition to the Philippines, they’ve heard from people in Singapore, Malaysia and mainland China over the past four months that she and Mark have been actively looking after clients out of their new Hong Kong Island base.
“Whether we can help them now depends on various factors, including regulatory considerations, and for now we operate on a case-by-case basis.
“Sometimes you have to have a certain number of clients [from a particular country] before you need to become regulated there.”
Like London eight years ago, Hong Kong and Asia generally are said by the Maseco executives to lack wealth managers who cater specifically to American expats. Globaleye has an expat specialist working out of its Hong Kong office, while in Bangkok, another husband-and-wife partnership, that of Chad and Peggy Creveling, of Creveling & Creveling, looks after Americans there.
Both Schers hail from the US state of Michigan, and have lengthy education and certification credentials in finance and financial services, including, in the case of Mark, a Masters degree in finance; US certification as an Investment Management Analyst; and a UK diploma in Regulated Financial Planning. Ashley holds the US Certified Financial Planner designation, a UK diploma in Regulated Financial Planning, and an MBA from the University of Warwick.
Mark’s bio also includes a tour in the US Marine Corps and experience in a family-run wine business, while Ashley’s areas of special expertise include insurance and cross-border protection planning.
After launching their careers in wealth management in the Detroit area, the Schers set their sights on an overseas assignment early on, but, says Mark, it took them a few years to find Maseco and settle down there. Along the way, they both worked for MetLife in Michigan, around which time “the opportunity to go abroad came across Mark’s desk”, Ashley recalls.
That particular opportunity didn’t pan out because, Ashley says, it coincided with the financial crisis, but eventually Mark found his way to St James’s Place in London and, ultimately, to Maseco, which at that point was located on Charles II Street in London’s Mayfair district. (The offices are now located on the Strand in the West End.)
‘Next logical step’
Josh Matthews, who is Canadian, and James Sellon, who is British, originally conceived the idea that would become Maseco while they were working for Citi-Smith Barney in London, following Salomon Smith Barney’s merger with Citibank.
Sellon, who is a co-managing partner of Maseco with Matthews, says today that expanding their brand into Asia was “the logical next step” for their business.
“Over the last eight years, we have helped thousands of US clients in Europe navigate the complexities of allocating capital in a multi-jurisdictional world,” he says.
“We believe that international US citizens face the same financial challenges globally, and that Maseco Asia can leverage off [of our experiences in] London.”
Maseco Asia’s challenge
The challenge for Maseco Asia now, Ashley says, is to reach American expats in Hong Kong and regionally to let them know that Maseco exists, and ideally, to do so before they are talked into making investments that are almost certain to cause them problems down the road, such as non-US collective investments that the US tax authorities regards as PFICs (passive foreign investment companies).
Among the Hong Kong expat circles Ashley and Mark will be looking to explore and cultivate are the ones frequented by US-focused accountants and legal specialists, as well as independent financial advisers who currently don’t look after American clients.
(An institutional operation, which provides expertise in handling American clients as needed to advisory firms that otherwise wouldn’t be able to handle American expats, has long been a major feature of Maseco’s London business, and it’s one the Scher’s intend to include as well – once the word gets out.)
“For now, we’re a fairly unknown entity out here,” Ashley says.
“Getting through the regulatory process was a massive challenge, but we’ve done it.
“The hurdle facing us now is to build our brand in this market.”