At a global level, 18.7% of HNW wealth is invested outside one’s country of residence. Almost a quarter of these assets are offshored for general geographic diversification reasons, making it the most important driver. Access to better investment options ranks second, followed by tax efficiencies. Strong market volatility in many parts of the world is also motivating investors to seek better returns abroad. Yet there are notable regional differences, and wealth managers that fail to understand the drivers that motivate HNW investors in a particular country to offshore wealth will have little success growing their offshore book.
Key points include –
- Global diversification is becoming increasingly important as correlations are on the rise, making it the number one driver to offshore HNW wealth.
- HNW investors in developing markets invest offshore to gain access to a wider range of investments, while those in developed markets seek to reduce home market bias.
- Despite a number of tax-related offshore scandals emerging in recent years, one fifth of HNW assets are still held offshore to gain tax efficiencies. However, this driver is only prominent in a number of countries – mainly those with unfavorable and complex tax systems.
- Recent market volatility and low interest rates in many countries across the globe have seen better returns offshore rank as the fourth most important driver for offshore investments.
Critical success factors –
- Become a one-stop-shop – Wealth managers looking to attract offshore funds have to be prepared to offer a wide range of investment options and services. Our data shows it is offshore centers with deep and wide financial markets that top the list in terms of offshore rankings. Offering hedging tools, in particular, is becoming increasingly important as forex markets are likely to become more volatile.
- Offer access to international markets via funds – Low returns at home are motivating investors to look for returns offshore. To avoid losing assets under management to offshore businesses, wealth managers without international operations should provide investors with access to overseas markets through funds.
- Leveraging election-related and other political uncertainty – Political uncertainty as a driver for offshore investments is on the rise, both in emerging markets as well as some developed markets in Europe that are going to the polls in 2017. Consequently, providers should focus on the safe haven aspects many of the top offshore destinations offer to drive more wealth offshore.
The report “HNW Offshore Investment: Drivers and Motivations 2017” examines and contrasts HNW offshore investment preferences across 17 jurisdictions, providing readers with an in-depth understanding of what is motivating HNW investors to look for new homes for their wealth. Additionally, this report helps to understand the global trends that are driving offshore investments in the HNW space and also helps to learn why certain HNW offshore drivers are more relevant in some countries than in others and how this affects your business.
Companies mentioned in this report: UBP, Citibank, HomeLoan Experts, Investec, Sykes Anderson Perry
Scope
- Global diversification is becoming increasingly important as correlations are on the rise, making it the number one driver to offshore HNW wealth.
- HNW investors in developing markets invest offshore to gain access to a wider range of investments, while those in developed markets seek to reduce home market bias.
- Despite a number of tax-related offshore scandals emerging in recent years, a fifth of HNW assets are still held offshore to gain tax efficiencies. However, this driver is only prominent in a number of countries – mainly those with unfavorable and complex tax systems.
- Recent market volatility and low interest rates in many countries across the globe have seen better returns offshore rank as the fourth most important driver for offshore investments.
Reasons to buy
- Understand how to best promote your offshore proposition.
- Review your service offering, and adjust it based on a detailed understanding of HNW investors’ offshore investment preferences.
- Give your marketing strategies the edge required and capture new clients using insights from our data on HNW drivers for investing offshore.