This short guide aims to explain what is the difference between a wealth manager, an investment manager and a private bank, and why you may need one.
A wealth management centre (WMC) is a hub for managing investments and structuring wealth for high and ultra high net worth individuals. They typically have a highly-sophisticated financial services offering generally, for both individuals and corporates; they also tend to engage in a lot of cross-border business, and money and clients from all over the world flow through them. As a result, a HNW’s financial horizon clearly extends well beyond ‘home’ country borders they may select Asian banks or other hubs to match their complex needs.
There are wealth management centres dotted all around the world. Some, like the Swiss city of Geneva, are well-known and inextricably linked with the business of managing money for the wealthy, while others, such as the Malaysian island of Labuan, many people may have never even heard of.
What you might also call international financial services centres have attracted a lot of largely unwarranted bad press, particularly since the financial crisis. The mainstream media tends to use the term “tax haven” as an umbrella term for global wealth management centres, yet the vast majority have made it very difficult to carry out financial crimes like tax evasion and are cooperating fully with regulators and tax authorities on moves to make it virtually impossible to hide or launder money. Furthermore, while it is true that many wealth management centres are very appealing from a tax perspective, they boast many other attractions for all kinds of clients.
There are lots of reasons why an affluent individual may want their money managed outside of their home country, and perhaps even in a different place to where they are currently residing if they live abroad. They may be working across various countries and need a stable hub for all their financial affairs where the tax regime is hopefully also favourable; they may need specialist wealth management expertise which is not available in their domestic market; or they may live in a troubled country where they have reason to fear asset seizures or kidnap if their wealth was kept at home and subject to prying eyes.
You may be surprised to learn that there are over 40 wealth management hubs internationally. There are many factors which affect clients’ choices and it is important to choose the right financial centre to meet your needs.
The precise ranking of the world’s top financial services centres is hotly debated, but the top five cities stand as below, according to the think tank Z/Yen. It is interesting to note that cities, individual US states, offshore territories and even whole countries are variously known as international financial services centres.
While there are many wealth management centres for you to choose from, there will be very good reasons for you to select on over another – and this will depend on what you are trying to achieve and how jurisdictional decisions would affect your overall wealth, along with many other factors. Your financial adviser will be able to take you through all the implications of the centres open to you and, if your institution is an international one, they may even have a business unit that can help. Offshore capabilities are, in fact, a feature many of our users are looking for when they come to findaWEALTHMANAGER.com and we are proud to be able to match clients to leading international and domestic wealth managers as their needs dictate.