Developments in the global tax environment such as Foreign Account Tax Compliance Act mean a tough future for offshore centers that primarily position their offering around tax avoidance and client anonymity. However, as tax avoidance is not the main driver for high net worth (HNW) offshore investments there are plenty of opportunities for wealth managers to explore.
Discover the size of the offshore market and the role that HNW investment plays within this.
Analyse the key drivers for HNW offshore investments and how these vary by country.
Assess the importance of the various booking centers and which HNWs are choosing to invest there.
How large is the offshore market for HNW investors?
What are key drivers for HNW offshore investment?
What are the geographic differences behind the motivations for offshore investment?
Which booking centers are most widely used and why?
At a global level over one third of HNW individuals invest their assets offshore because they expect more promising returns on their investments, or in general broader investment opportunities than they would otherwise get onshore. At the same time, tax efficiency was only the second most common reason for investing offshore.
Verdict Financial estimates that in the 12 centers examined, over $3.1tn is held by HNW individuals. While this is an impressive number it is still more than $500bn lower than the peak in 2007, a trend that is mostly due to an outflow of deposits and mutual funds from certain centers toward the various onshore markets or other offshore markets.
Much of the booking tends to be done locally in the original region of the HNW individual; Asian investors dominate most of the Asian booking centers, with Hong Kong and Australia dominated by them, but also have significant presence in the UK and Switzerland.