Diversification and fiscal efficiency: the two advantages that individuals with high assets see to maintain their offshore wealth

According to Global Data

  • The equity managers must do a correct due diligence and offer a solid advice that takes into account different jurisdictions in order to capitalize the offshore wealth
  • Investors with high net worth are becoming increasingly demanding when it comes to structuring their fortunes in a legal but tax efficient way
  • The percentage of people who invest offshore has increased from 11.2% in 2014 to 16.9% in 2018

By Funds Society, Madrid

According to Global Data, wealth managers must provide advice that covers multiple jurisdictions to encourage the increase of investments abroad. This recommendation arises because there are more and more people with high assets who have their wealth outside the country of origin and who are interested in investing abroad.

In the firm’s opinion, this is not the time to be complacent: “Asset managers must do proper due diligence and offer solid advice that takes into account different jurisdictions in order to capitalize offshore wealth.”

According to reveals the report HNW Offshore Investment: Drivers and Motivations 2018, of GlobalData, in spite of the recent scandals on countries like Panama, the percentage of people who invests offshore has increased from 11.2% in 2014 to 16.9% in 2018 According to their conclusions, investors with a high net worth are looking for, for example, more and more houses outside their countries of origin to diversify their investments and obtain fiscal efficiencies. 

Heike van den Hoevel, senior equity analyst at GlobalData , admits that part of the offshore world has been affected by scandals such as the Panama Papers. “To avoid getting infected by this bad image, it would have been normal for many investors with this high-profile profile to have repatriated, at least part of their fortune. However, this has not been the case, since for them they continue to weigh more the value of relocating their wealth. ” In fact, the GlobalData study does not foresee that we will attend a repatriation of heritage.

Although it depends a lot on the country being analyzed, investors consider that the two main advantages are: achieve greater global diversification and achieve fiscal advantages. For example, for 24% of European investors to keep their wealth outside their borders is a matter of fiscal efficiency, while for 41% of Americans they believe it is an opportunity to diversify.

“Understanding the reasons why high net worth investors place their wealth abroad is critical to capitalizing on the growing share of offshore wealth. Fiscal efficiencies as a driver for investments abroad are almost as important for this class of investors as geographic diversification. This means that suppliers and advisors should focus on uncorrelated or less correlated risks when promoting offshore investments to potential customers, “Van den Hoevel adds.

As part of this trend, the demand for tax advice has increased significantly in recent years, and high net worth investors are looking for ways to minimize their tax obligations through financial hubs abroad. In this sense, clients are becoming more and more demanding when it comes to structuring their fortunes in a legal but efficient manner of taxes. However, it is a complicated task since governments in general have more to find these types of movements and are more committed to fiscal transparency.

Source :
https://www.fundssociety.com/es/noticias/negocio/diversificacion-y-eficiencia-fiscal-las-dos-ventajas-que-ven-los-individuos-con