High Net Worth (HNW) Offshore Investment – Drivers and Motivations 2020

The offshore wealth management market has surged in the wake of the COVID-19 pandemic, rebounding sharply after the volatility of Q1 2020. The pandemic has reshaped the offshore market, with the role of Asia Pacific rising as a destination for non-resident investors mainly based in North America and Europe.

This report draws on our 2019 and 2020 Global Wealth Managers Surveys to analyze the drivers behind offshore investments in the HNW space, along with our wide-ranging 2020 Banking & Payments Survey, which offers insight into retail investors with offshore investments. It examines and contrasts offshore HNW investment preferences across multiple jurisdictions and wealth tiers, providing readers with an in-depth understanding of what is motivating HNW investors to look to offshore booking centers. The report outlines key challenges facing the wealth management industry in 2021, taking into account the impact of the pandemic and increasing digitization.

Scope

– Non-resident investment assets reached an all-time high in Q3 2020, with further growth expected in 2021.

– Roughly 10% of investors have offshore investments, although this figure approaches a third in the Middle East and Africa.

– While not an overt driver, expats are a core demographic of the offshore investment market.

– As the recovery takes hold, international trade and business supply chains are expected to increasingly drive more HNW wealth to be booked offshore.

– COVID-19 and its effects on local markets are expected to drive more investors to offshore wealth in North America, while the pandemic has little impact on Asia Pacific’s investment intentions.

Reasons to buy

– Understand the growth of the non-resident investor segment in recent years.

– Identify which offshore booking centers are gaining market share amid the pandemic.

– Gain insight into the drivers behind retail and HNW investor offshoring.

– Forecast HNW demand for offshore wealth management in all key markets.

– Size key market segments within the offshore investment market.

– Map offshore product and service provision across the world.

– Examine the effects of COVID-19 on the HNW offshore investment portfolio.

Companies mentioned

HSBC

Citibank

BNP Paribas

Standard Chartered

Goldman Sachs

Julius Baer

Table of Contents

Table of Contents

1. Executive Summary

1.1 Market overview

1.2 Key findings

1.3 Critical success factors

2. Offshore Market Trends

2.1 Non-resident investment assets have hit an all-time high

2.2 Challenges are mostly fears of a repeat of past government action

2.3 More and more investors are open to booking assets abroad

3. Profiling Offshore Investors

3.1 Onshore investors are the core of the offshore market

3.2 While many have offshore accounts, few outside of the HNW client base are worth pursuing

3.3 Offshore investment drivers reflect a desire to seek out the best investment management

4. Offshore Service Provision

4.1 Portfolio preferences of offshore investors

4.2 Offshore wealth management is well developed in most regions

4.3 Digitization has become central to the offshore investment market

5. Appendix

5.1 Abbreviations and acronyms

5.2 Definitions

5.3 Methodology

5.4 Secondary sources

5.5 Further reading

List of Tables

List of Tables

Table 1: Non-resident assets growth rates, 2019-20e

Table 2: COVID-19 pandemic support and stimulus spending by country/market, 2020-21

Table 3: Top booking centers for select markets (where HNW investors are expected to offshore more AUM)

List of Figures

List of Figures

Figure 1: 2020 will have recorded the fourth year of growth for the offshore investment market

Figure 2: The world can expect more wealth to flow out of North America

Figure 3: Most markets expect HNW investors to increase their offshore portfolio

Figure 4: The pandemic and threat of recession are notable drivers in North America and Europe

Figure 5: Long-term drivers of offshore wealth management growth continue to influence HNW decisions

Figure 6: Offshore investors are mostly drawn from the wider investor client base

Figure 7: Internationally connected millennials are the prime offshore market – provided they invest at all

Figure 8: Offshore investment is not common for most investors outside of the private wealth market

Figure 9: Unlike the onshore market, the small proportion of HNW investors dominate offshore AUM

Figure 10: Expats are a core component of the offshore market

Figure 11: The HNW expat market is concentrated in the US and other Anglo markets

Figure 12: Indian HNW expats dominate the market

Figure 13: The connected global economy underpins offshore wealth

Figure 14: Latin America’s political uncertain has driven many of its retail investors into the offshore market

Figure 15: HNW investors in North America relied on alternatives during the pandemic

Figure 16: The equity portion of the offshore portfolio dropped considerably due to the pandemic

Figure 17: The North American market is well provisioned with offshore services

Figure 18: Currency risk has grown over the last 10 years and is heightened in times of crisis

Figure 19: Most private wealth firms in the US and Canada can connect clients to offshore partners

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