Half of wealth managers expect the demand by high net worth individuals for offshore investments will rise, as it becomes easier to access offshore markets.
Just 9.1% of respondents to GlobalData’s 2019 Global Wealth Managers Survey believe that demand will fall.
But research suggests that firms are not well-placed to deal with the expected business bonanza.
Limited capabilities
On average, high net worths already book a third of their liquid wealth abroad.
Therefore, supporting investors in this regard is crucial to avoid losing assets under management to offshore businesses.
“Only 44% of wealth managers that target HNW investors have the infrastructure in place to refer their clients to overseas branches or offices of their organisation,” according to Heike Van Den Hoevel, senior wealth management analyst at the data and analytics company.
“Meanwhile, only 58.6% have in-house capacity to advise their clients on the taxation of international assets.
“This is even more surprising given the increased focus on tax matters following numerous offshore scandals, as well as rising governmental scrutiny and intergovernmental cooperation.”
Great expectations
A fifth of high net worth wealth is held abroad for one of two reasons: tax efficiency or client anonymity.
According to GlobalData, clients are becoming increasingly demanding when it comes to structuring their fortunes in a tax-efficient way.
This comes at a time when realising such efficiencies is harder as governments globally have picked up their game.
But the Panama and Paradise Papers appear to have done little to dim demand.
“When it comes to the provision of advice on international taxation, providers must up their game,” Van Den Hoevel said.
“The proportion of high net worth individuals that invest offshore has been on the rise despite the scandals that have shaken the industry and ongoing negative media coverage,” she added.
“This trend is not expected to change.”
