Family Office Feature: In Conversation With Mustafa Hussain
Jersey Finance UK Director, Robert Moore, discovers more about Middle Eastern family offices in conversation with Mustafa Hussain, Private Office Legal Counsel at Accuro.
Planning in the Middle East often entails family dynamics, law, custom, Shariah and governance. What is the best starting point?
"Clients do not select you because of what you do. They believe in why you do it.
“If your purpose is to protect their loved ones and life’s work or legacy, you can demonstrate this to a family through your insight and solutions.
“Since expertise is a given, not a differentiator, in the Middle East the starting point has to be investment in a meaningful relationship with the family. Build bridges by showing you understand what is important to them. Reflect their values through pertinent solutions. Anticipate their latent needs (the ones they do not realise they have) as well as the issues they seek your counsel on.”
“Trust has to underpin everything you do. It’s evidenced in the Middle East through spending time, being constantly accessible and delivering in every interaction, so that you remain in the circle of trust. Middle Eastern clients have the right to assume that service providers are highly attuned to cultural issues, without the burden being on the client to explain. Invest the time to learn about these: it will be of immeasurable help to you and give confidence to the family.
“Getting to grips with the family dynamics will support the determination of plans to ensure you consult with (or at least keep informed) everyone concerned. That reinforces trust and avoids drama. Keep that as the focus and the governance will fall into place. If you formulate the right questions, applying the law (offshore, onshore or Shariah) will follow.”
Beyond the start, how can practitioners best separate workstreams?
"Do not make the mistake of delivering your advice to the family and assuming that fulfils your role.
“Regardless of what they engage you for, your obligation is to deliver the solution they need.
“Whilst you may not be able to fulfil all aspects yourself, partnering with like-minded service providers (whilst you retain project management) will achieve this.
“Obviously, the basics, such as mapping out the family, defining the lines between them, their personal and business assets and what belongs to whom (which is trickier than it sounds) helps. It is wise to look at the calendar at the outset of the project. If you can see that Ramadan or the Hajj-through-August holiday period falls in the middle of your timetable, it is sensible to anticipate that.
“Also, remember cultural basics: avoid making family members lose face or clash with each other. Have the sensitivity to work out how you deliver briefings, to whom and when.
“Get the private office onside and life will be easier when seeking access to the principals, signatures and scheduling! Start with tax, remember to involve corporate expertise when reviewing group structures and finish with the good governance piece.”
You have specialised in advising Middle Eastern clients for over two decades: in your experience, what do such families really want from their advisors?
“They want you to support them in planning for or resolving the issues that keep them up at night. All other activity funnels into those prime preoccupations.
“The main worries are usually a concern to keep the family together and the fear of falling foul of that proverbial “rags to riches and back again” tri-generational cautionary tale. Diversification of income and capital preservation also drive their decision making. These factors hold true for families in any jurisdiction.
“But, in the Middle East specifically, additional concerns arise from geopolitical factors locals need to hedge against.
“In Europe, we forget or take for granted the privileges of political stability, elected representation, independent judiciary and access to justice as well as a sense of security and transparency around taxation and the actual cost of living and doing business. Not all jurisdictions offer such privileges and rights in the same way. That merits additional planning and makes well-regulated jurisdictions with excellent service providers, like Jersey, an attraction.”
How do you go about demonstrating your understanding of Shariah principles in practice?
"When advising Muslim clients, no matter how adherent or ‘liberal’ they may say they are or appear to be, it is incredibly important not to advise on the basis of your or their assumptions or incomplete information.
“Some clients seek complete adherence to Shariah, as a reflection of moral principles comprising their way of life. Others may surprise you by seeking a religious prescription to apply after their lifetimes – the aim being that their soul will benefit, notwithstanding countenances to the contrary in their lifestyle. It is always frustrating to see ‘avoidance’ of moral principles or planning to ‘evade’ codes.
“Personally, I always explore if the client has fully understood Shariah and its intentions. The aim is to ascertain whether they can work within it, instead of avoiding it. Once clients understand how lifetime gifts, allocation of beneficial interests and other techniques can help them achieve their goals within the religious law, they are happier with the result and need not expose themselves to the risk and discomfort of avoidance.
“Appointing a Muslim protector within a trust, or an expert advisory board can also help embrace all the compliant market solutions in place of taking short cuts to get quick results.”
What are your top tips for family offices in 2021?
"Good governance will be a trend.
“This is not just about responsible business, it actually helps with involving blood family members in the firm without disruption and it assures succession.
“ESG and impact investing are meaningful movements that go beyond trend and will become a hygiene factor. As the second and third generations come into their own, we will see the rise of meritocracy (away from loyalty) as a determinant of success in family businesses.
“I also predict an uptake in the use of corporate vehicles (family investment companies, private funds and limited partnerships) to support collaborative co-investment and succession planning in extended family groups. The future for families is bright and the pandemic has helped re-align perspectives to what matters most in life: health, wellbeing and relationships.”
Published in Jersey Finance on 18 January 2021