Offshore Wealth Management: Investor Drivers and Motivations 2024
Summary
This report draws on GlobalData’s proprietary surveys to analyze the drivers behind offshore investments. It examines and contrasts offshore investment preferences across multiple jurisdictions and wealth tiers, providing readers with an in-depth understanding of what motivates investors to offshore wealth.
There is a strong correlation between offshore investments and affluence. As a result, lower wealth segments are of little appeal to wealth managers. However, compared to their older peers, millennials and Generation Z hold a greater proportion of their wealth offshore. While lower in liquid assets, more time to accumulate wealth and a higher propensity to hold wealth offshore makes younger generations an attractive segment. Meanwhile, the reasons to offshore wealth differ significantly across target markets, but an expectation of better returns and a better investment product range abroad are the most important offshore drivers when looking at the total retail deposit and investment offshore market.
Scope
- At a global level, over 40% of global HNW wealth is booked offshore.
- Globally, offshore investment penetration increases from 10% among mass market investors to 45% among the mass affluent.
- Real estate accounts for the largest component of the average global HNW offshore portfolio, driven by diversification opportunities and tax efficiencies.
- While return on investment considerations are important across wealth segments, they are notably more important among retail (i.e., non-HNW) investors.
- Understand growth sectors within the non-resident investor segment in recent years.
- 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.
- Understand how best to promote your offshore proposition.
- Review and adjust your proposition based on a detailed understanding of the different segments that make up the offshore investment market.
- Offshore Market Overview
- HNW investors are avid offshore investors
- There is a strong correlation between affluence and propensity to book wealth abroad
- Offshore investments are becoming more prevalent, driven by younger investors
- Offshore investors are a lucrative but promiscuous segment
- Well-developed financial markets attract the bulk of HNW wealth
- Easy market access drives HNW investment flows between Hong Kong and China
- The HNW Offshore Portfolio
- The average HNW offshore investment portfolio is well-diversified
- Alternatives' share of offshore portfolios is on the decline
- FINEXITY provides investors with access to alternatives via tokenized assets in Germany
- Offshore Drivers
- A wide range of considerations drive HNW investors to channel wealth abroad
- Business interest are the number one reason HNW investors hold wealth offshore
- Business interests are the single most important HNW offshore driver
- DBS targets international entrepreneurs in China
- While key across all segments, better returns are more crucial in lower wealth bands
- A wide range of investment opportunities will convince HNW expats to invest in their country of residence
- Expat money flows are a major offshore driver among the wider market
- DBS focuses on attracting NRIs based in Hong Kong
- Achieving true diversification is becoming increasingly difficult
- Global uncertainty is driving up the importance of economic and political instability
- Tax remains a key offshore driver despite attempts to clamp down on tax evasion
- Key Takeaways
- Appendix
Research Assistance
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