The offshore wealth management market is undergoing its biggest adjustment in a generation – or since last year, according to GlobalData Financial Services
The rollout of the Common Reporting Standard (CRS) is a major change to a market known for being opaque, and the 2016 figures are the first time its effects will be felt. Though there may be some impact on the classic tax havens, the major offshore markets will continue to grow as before.
The CRS, agreed in 2014, is the new multilateral automatic exchange of tax information, designed to combat tax evasion by moving the standard for sharing tax information among nations from upon request to automatically.
Last year saw the first collection of data occurring by the early adopters (broadly speaking the EU and dependent states), with the first exchange to occur in 2017.
Four out of the top five offshore markets are among the early adopters of the CRS, hailing as they do from the EU, and there is little evidence that offshore investors have shifted assets to avoid disclosure.
All five offshore markets were the largest in the world in 2015 and continued to be so into 2016.
As before, the institutional sector rather than individual investors had a better year, with the offshore sector becoming more based around the needs and plans of pension and investment funds of various types.
This is because the fundamental calculus of the offshore market has long been shifting away from client anonymity, which is now a driving force for offshoring among only 3% of HNW offshore clients according to GlobalData’s annual survey of wealth managers.
The drive towards offshoring has shifted towards maintaining balanced portfolios through more general geographic diversification, now the top reason to offshore wealth among HNW investors according to GlobalData’s 2017 Wealth Managers Survey.