Wealth is moving inexorably onshore, says Boston report
The Boston Consulting Group's 'Maintaining Momentum in a Complex World: Global Wealth 2013' report has warned wealth managers that UHNWI wealth is moving onshore. This is due to the growing scrutiny being placed on private wealth by national tax authorities. …
The Boston Consulting Group has warned wealth managers that they face a challenging period in a rapidly changing global UHNWI landscape. The evaluation of the current climate was published in Boston’s ‘Maintaining Momentum in a Complex World: Global Wealth 2013’ report.
This ‘rapidly changing landscape’ comprised a 7.8 per cent year-on-year growth in global wealth in 2012, which was the single biggest surge since 2009, indicating a consolidation of wealth among the super-rich. According to the Boston report, global private financial wealth now stands at a total of $135.5 trillion.
Wealth increased measurably in the old-world regions of North America (7.8 per cent), Western Europe (5.2 per cent), and Japan (2.4 per cent), mainly owing to the sharp rebound in equity markets in most countries, particularly in the second half of the year. Meanwhile, new wealth creation fuelled stronger, double-digit growth in the new-world regions of Asia-Pacific ex Japan (13.8 per cent), Eastern Europe (13.2 per cent), and Latin America (10.5 per cent). Wealth in the Middle East and Africa (MEA) saw near-double-digit growth (9.1 per cent). New-world regions will account for nearly 70 per cent of the growth in global private wealth over the next five years.
“With the mature economies of the ‘old world’ and the developing economies of the ‘new world’ moving at different speeds, wealth managers in different regions are grappling with tough sets of problems. Diverse strategies will be required to succeed on either side of the divide”, warned the report’s co-author and Boston’s global head of asset and wealth management, Brent Beardsley.
The report also highlighted the development of a surprising trend – the movement of private wealth from offshore to onshore institutions; whilst offshore wealth rose by 6.1 per cent to $8.5 trillion it is expected to slow to a total of $11.2 trillion by 2017, with wealth increasingly moving onshore due to the intense pressure that tax authorities are exerting on offshore centres.
But, despite this apparent paradigm shift towards onshore wealth management, Albert Levy, senior partner at law firm, Ince & Co. believes traditional offshore havens will retain their status as the most desirable superyacht flags. “There are sound reasons why individuals register their yachts in, say, Cayman or Marshall Islands”, Levy explained.
“What are they? Well if you are a US resident, you may wish to mitigate the expenses of running a US-flagged vessel.” Equally, Levy continued, “By having a European owning company or a European Flag one loses the right to Temporarily Admit the yacht and become liable to VAT on importation.”
For Levy, popular ‘offshore’ flags such as Cayman Islands or Marshall Islands have defined themselves through their quality of service. “Cayman and Marshall Islands are not mere ciphers and both are concerned to maintain standards so that they remain as white as possible on Port State Control lists.”
This ‘rapidly changing landscape’ comprised a 7.8 per cent year-on-year growth in global wealth in 2012, which was the single biggest surge since 2009, indicating a consolidation of wealth among the super-rich. According to the Boston report, global private financial wealth now stands at a total of $135.5 trillion.
Wealth increased measurably in the old-world regions of North America (7.8 per cent), Western Europe (5.2 per cent), and Japan (2.4 per cent), mainly owing to the sharp rebound in equity markets in most countries, particularly in the second half of the year. Meanwhile, new wealth creation fuelled stronger, double-digit growth in the new-world regions of Asia-Pacific ex Japan (13.8 per cent), Eastern Europe (13.2 per cent), and Latin America (10.5 per cent). Wealth in the Middle East and Africa (MEA) saw near-double-digit growth (9.1 per cent). New-world regions will account for nearly 70 per cent of the growth in global private wealth over the next five years.
“With the mature economies of the ‘old world’ and the developing economies of the ‘new world’ moving at different speeds, wealth managers in different regions are grappling with tough sets of problems. Diverse strategies will be required to succeed on either side of the divide”, warned the report’s co-author and Boston’s global head of asset and wealth management, Brent Beardsley.
The report also highlighted the development of a surprising trend – the movement of private wealth from offshore to onshore institutions; whilst offshore wealth rose by 6.1 per cent to $8.5 trillion it is expected to slow to a total of $11.2 trillion by 2017, with wealth increasingly moving onshore due to the intense pressure that tax authorities are exerting on offshore centres.
But, despite this apparent paradigm shift towards onshore wealth management, Albert Levy, senior partner at law firm, Ince & Co. believes traditional offshore havens will retain their status as the most desirable superyacht flags. “There are sound reasons why individuals register their yachts in, say, Cayman or Marshall Islands”, Levy explained.
“What are they? Well if you are a US resident, you may wish to mitigate the expenses of running a US-flagged vessel.” Equally, Levy continued, “By having a European owning company or a European Flag one loses the right to Temporarily Admit the yacht and become liable to VAT on importation.”
For Levy, popular ‘offshore’ flags such as Cayman Islands or Marshall Islands have defined themselves through their quality of service. “Cayman and Marshall Islands are not mere ciphers and both are concerned to maintain standards so that they remain as white as possible on Port State Control lists.”
Profile links
Cayman Islands Shipping Registry
Marshall Islands Yacht Registry (International Registries, Inc.)
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