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UBP in the press 17.01.2023

The appeal of wealth planning amid increasing mobility

The appeal of wealth planning amid increasing mobility

Le Temps (16.01.2023) - In a world of heightened uncertainty, more and more private bank clients are considering setting up residence outside their native countries, and recent geopolitical tensions have sped up this trend.

Besides avoiding physical harm and financial losses, the reasons for such relocation range from professional opportunities and business expansion to family requirements or access to a better healthcare system. For some, international mobility has even become a way of life.

Charting the right course

Many European countries – Cyprus, Spain, Italy, Malta, Portugal, Greece – and others including the United Arab Emirates, Israel, Singapore and Thailand have understood the benefits of having high net worth families among their populations and offer appealing schemes to attract them. Such arrangements can be loosely divided into three categories, each with conditions attached: the ‘golden visa’ scheme, which gives not only entry but also residency rights; ‘residence by investment’ (RBI), whereby administrative and tax residency is granted in exchange for an investment in the country; and ‘citizenship by investment’ (CBI), under which an investment in real estate or a charitable donation can be rewarded with a passport.

However attractive a scheme may be, crossing borders must never be taken lightly as there are many legal and tax implications, so the mover must carry out careful research before taking any decisions. Every option must be weighed – from a legal and tax perspective, but also in relation to the family’s circumstances and goals. Given the complex web of factors involved, with each scheme and jurisdiction having their own set of specific features, the mover must define their priorities to make sure they take the right direction and avoid complications that will be difficult to resolve later.

The natural partner and advisor to turn to in such cases will be the private banker, whose role in assessing the feasibility of the project and guiding the client is crucial. The analysis will involve cooperating closely with the client’s external advisors to scrutinise the family’s matrimonial property regime and estate plan, as well as what tax breaks are offered by the proposed destination country. Within the bank, the wealth planning team’s input will be essential as their expertise gives them a holistic view that will ensure no aspects are overlooked. And among the factors that need to be looked into, contrary to popular belief, taxes are not generally at the top of the list. Higher priorities are safety, geopolitical stability, healthcare, language, location and access to amenities, climate, schools, cost of living, and quality of life. Tax rules and the legal system come after that.

Planning an exit route

But bear in mind that establishing a home abroad does not necessarily mean leaving one’s country of origin. Some people, rather than getting installed in another country, are simply planning an exit strategy in case, for example, political or social unrest breaks out in their own country. In such cases, among the key considerations are the feasibility of owning two residences, the tax consequences, and access to the housing market. Another aspect to be taken into account is whether or not to keep assets in another country than where one lives. For a family setting up in Switzerland, for instance, it makes sense to have their wealth there too, given the country’s legal system, tax regime and confidentiality rules. This would not necessarily be an obvious choice for countries such as the UK, Israel or Thailand, on the other hand.

With international clients’ estates becoming increasingly complex and disseminated around the world, a bank’s overall size and therefore its reach across markets have become deciding factors. And this not least because national regulators will only allow a bank to act on a client’s behalf if it has a certain level of technical, operational and legal capabilities in the country in question. Providing sophisticated cross-border wealth planning services allows private banks to build closer ties with their clients, but also and above all to help them anticipate the future stages of their lives and how to pass on their estates.

Delivering such a service requires solid expertise – which is the object of fierce competition in the Swiss financial sector today. Providing clients with a professional relocation service, beyond the necessary legal and tax knowledge, also requires up-to-date IT systems and operational processes. And all that, in turn, calls both for substantial investment and for agility – a combination of resources and qualities that few players truly possess.

Read more about Wealth planning
Bertrand Binggeli Bertrand Binggeli
Group Co-Head of Wealth Planning

Hedge funds

UBP is one of the longest-standing investors in hedge funds and a leading European player in the sector.

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