session 6 - relevant issues for the future

8/8/2019 Session 6 - Relevant Issues for the Future

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Original del profesor Miguel A. Muoz de Luna del IE Business School.Versin original de 1 de septiembre de 2010.

Editado por el Departamento de Publicaciones del IE, Mara de Molina 13, 28006 Madrid, Espaa.2010 IE. Prohibida la reproduccin total o parcial sin el permiso escrito del IE.

RELEVANT ISSUES

FOR THE FUTURE


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Pillars: Banking secrecy, financial privacy, numbered accounts

Reason: Tax evasion, money laundering from illegal activities,political prosecution Hiding (protecting) wealth

Cons: Fat wealth management fees Unefficient investment strategies

Transparency and communication limitation

Offshore Banking


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Offshore Banking


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Offshore Banking

Global offshore assets account for some 16% of total UHNWI wealth. Europe, led by Switzerland and the Channel Islands, remains as themost significant destination for non-resident assets, followed by theCaribbean, particularly Cayman Islands and the Bahamas. Although theAsian financial centres of Singapore and Hong Kong have been

growing fast, they rank only third in terms of offshore assets we are seeing a trend towards HNWIs keeping their assets onshore. Another reason is rising regulatory pressure, due to the increasedfocus on transparency, as well as anti-money-laundering and counter-terrorism financing concerns. we expect that offshore flows into Singapore and Hong Kong will

retain momentum In order to succeed, offshore centres will need to reinvent themselvesand leverage competitive advantages,


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Offshore Banking


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Offshore Banking


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Present situation: Increasing pressure on offshore banking Increasing availability of confidential data stolen Italy has offered a generous amnesty to tax evaders Liechtenstein to pay compensation for data stolen FATCA:

Foreign Account Tax Compliance Act (March 2010) All foreign institutions have to disclose all US accountholders to the IRS

Offshore Banking


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My PB: Offshose banking will come to an end in 10 years

Pressure on governments (joint initiatives) Pressure on the banking industry (UBS,) Pressure on individual investors (Informants in Liechtenstein,

Switzerland,) 9/11 was the starting point of intense scrutiny of cross-border

capital movements Individuals will have an increasing contribution to compensate

the huge budget deficits created by the financial crisis

Offshore Banking


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Family Offices

Areas of responsibility (functions): Wealth manager (Asset enhancement and protection) Central coordinator of financial services Sucession or transition manager

Educator and mentor to the next generation Financial crisis: Assets have fallen from 5 to 40% Shift to safety

1. Cash and tangible assets (gold)

2. Opportunistic investments (real estate, private equity) The 6 Ps for advisor selection: People, Phylosophy, Process, Product, Performance, Price


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Family Offices


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Demand for Philanthropy


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Tomorrows Philanthropist

(Key Findings)


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(Key Findings)


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(Key Findings)


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(Key Findings)


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(Key Findings)


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(Key Findings)


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Clients have to regain their trust (in the regulatory bodies). Asset allocations seek predictable cash flows andprotection against downside risk.

HNWIs have a more hands-on role in their finances:

Specialized and independent advice Transparency and simplicity Effective portfolio and risk management Integrated advisory approach

Emotional factors become a prominent feature.

WM firms are using behavioral finance to rebuild trust.

Clients Expectations Post-crisis


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PB Challenges

P.B. Models - Expect long term industry evolution towardsthe provision of independent and holistic advice. Segmentation - Entrepreneurs constitute a significant andgrowing share of todays wealth market. Products - Clients are increasingly demanding acomprehensive offering, covering both the asset and liabilitysides of their balance sheets. Lending presents a vitalopportunity, as it can increase client value by up to 30%. Relationship Management - Institutionalising the client

relationship has a significant impact on profitability. Brand - The management of reputational risks is a keycomponent of value management.


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PB Challenges

session 6 - relevant issues for the future

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