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HNW Offshore Investment: Drivers and Motivations: Analyzing the drivers behind HNW offshore investments

Published: Jun 22, 2016 | Pages: 33 | Publisher: Verdict Financial | Industry: Banking | Report Format: Electronic (PDF)

There are multiple drivers for HNW offshore investment. At a global level, almost a quarter of HNW individuals invest their assets offshore to gain access to a better or wider range of investment options, making it the most important driver. Tax efficiencies rank second, followed by access to better investment options. However, bearish financial markets and strong currency volatility in many parts of the world are also motivating investors to seek better returns abroad.

Key Findings

- Access to a better or wider range of investment options is a particularly strong incentive for offshore investments among HNW individuals in less mature markets. However, this driver is also becoming increasingly important in developed markets as investors are eager to seek international diversification in light of rising correlations. 
- 23.2% of HNW individuals invest 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 come in third as a driver for offshore investments.
- Currency volatility - driver number four - has become significantly more important over the past year thanks to ongoing divergence in global monetary policies. 
- Political and economic instability is a strong driver for HNW individuals who fear for the long-term future of their assets. The main beneficiaries are offshore destinations with stable economies such as the UK, the US, and Switzerland, as investors are looking for safe havens for their money.

Synopsis

“HNW Offshore Investment: Drivers and Motivations” draws on our 2015 Global Wealth Managers Survey to analyze the drivers behind offshore investments in the HNW space. It examines and contrasts HNW offshore investment preferences across 20 countries, providing readers with an in-depths understanding of what is motivating HNW investors to look for new homes for their wealth. 

Specifically the report:

- Understand the global trends that are driving offshore investments in the HNW space.
- Compare how HNW offshore investment drivers differ across 20 countries.
- Learn why certain HNW offshore drivers are more relevant in some countries than in others and how this affects your business.
- Understand how to react to the constantly changing tax environment and adjust your offshore proposition accordingly. 
- Understand how political and economic instability affects client preferences and how global markets shape investment behavior in the HNW space.

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. 
 Table of Contents

EXECUTIVE SUMMARY
HNW offshore investment is driven by a multitude of reasons
Key findings
Critical success factors

GLOBAL TRENDS DRIVING HNW OFFSHORE INVESTMENTS
There are multiple drivers for HNW offshore investment
Other drivers include better returns offshore, concerns over currency volatility, and political or economic instability
Significant regional differences exist in the motivations for offshore investment
HNW offshore investment is driven by a multitude of factors

DETAILED DRIVER ANALYSIS
Country-level analysis reveals greater insight into HNW individuals' motivations for offshore investment
Driver one: HNW individuals invest offshore to gain access to a broader and better range of investments
HNW investors in developing markets invest offshore to gain access to a wider range of financial products
A broader range of investment options allows HNW investors to achieve portfolio diversification benefits
Driver two: HNW individuals resident in countries with complex tax systems look for tax efficiency offshore
HNW investors in the West seek tax efficiency when investing offshore
Tax exchange agreements mean offshore investing for tax purposes has become more restrictive
Driver three: HNW investors are betting on better returns offshore
Low interest rates in Europe will continue to motivate investors to hold wealth offshore
Driver four: Currency volatility as a driver for offshore investments is becoming more important
South African investors offshore to hedge against the depreciation of the rand
Driver five: political and economic instability is a strong driver for HNW individuals who fear for the long-term future of their assets
Countries where political or economic instability is less of a concern benefit from strong HNW wealth inflows

APPENDIX
Abbreviations and acronyms
Supplementary data
Definitions
Affluent
CRS
Double taxation convention (DTC)
HNW
Liquid assets
Mass affluent
Residency
Exchange of information
TIEAs
Methodology
Verdict Financial's 2015 Global Wealth Managers Survey
Bibliography
Further reading
About Verdict Financial
Disclaimer
List of Tables

Table 1: HNW offshore investment drivers in the Americas, 2015
Table 2: HNW offshore investment drivers in Asia Pacific, 2015
Table 3: HNW offshore investment drivers in Central and Eastern Europe, 2015
Table 4: HNW offshore investment drivers in the Middle East and Africa, 2015
Table 5: HNW offshore investment drivers in Western Europe, 2015 


List of Figures

Figure 1: Access to a greater range of investments is the primary driver for offshore investments
Figure 2: Reasons for investing offshore vary greatly by region
Figure 3: A better range of investment options is one of the main drivers behind offshore investments in the majority of countries surveyed
Figure 4: Tax efficiency is one of the main drivers behind offshore investments for many countries with high taxation
Figure 5: Hundreds of bilateral TIEAs have been signed since the financial crisis
Figure 6: Better returns offshore are motivating investors to internationalize their portfolios
Figure 7: Funds that provide international exposure allow for further diversification
Figure 8: Currency volatility left investors concerned in 2015
Figure 9: Currency volatility as a driver for offshore investments is becoming more important
Figure 10: The UK is the preferred booking center among South African HNW investors
Figure 11: Investec provides non-resident mortgages to South African HNW investors
Figure 12: UBS targets international HNW entrepreneurs with targeted offers
Figure 13: Political and economic instability figures strongly as a driver for offshore investments in a number of countries

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