A qualitative survey, headed by Scorpio Partnership, has found that Switzerland has maintained its place as the leading financial centre for high net worth individuals. Its new index, the Mobile Wealthy Residency Index (MWRI), based on analysis of eleven factors ranked Switzerland in first place despite a political onslaught. London ranked in second place despite recent tax increases on HNWIs.
The main findings of the report were:
In today’s economic environment, where wealth, taxation and the offshore environs are seemingly etched into every discussion in the wealth management industry, in the UK and beyond, the Scorpio team has pooled the collective knowledge and thoughts of the advisory community to measure where the mobile wealthy judge to be the best jurisdictions to meet their wide ranging demands.
The result, in stark contrast to the battering it has taken recently, still sees Switzerland top Scorpio Partnership’s first MWRI. The alpine state shows that its attractiveness is far more than just a centre for booked assets. In fact, its number one ranking is clear evidence of a key theme in the selection of a jurisdiction in which to reside – the mobile wealthy take into account a whole host of criteria when taking the decision on where to reside. Switzerland’s wide appeal places it ahead of key competitors such as London, Singapore, New York and Hong Kong in the beauty parade for a potential residence for the mobile wealthy.
The Alpine state has a strong positioning across almost all of the principal 11 criteria used by the mobile wealthy when making a decision on where to reside. In short, Switzerland offers would-be residents the best all-round package. It scores top for ‘Economic and Political Stability; ‘Legal Considerations’; ’Education for Children’; ‘Proximity’; and ‘Culture/Infrastructure’ and ranks second and third for ‘Employment and Business Opportunities’ and ’Depth of Financial Services’ respectively.
According to Scorpio, that breadth of attractiveness is of great significance in an environment where fiscal incentives are often seen as the be-all and end-all of the selection process. Switzerland receives an average ranking for ‘Fiscal Considerations and Immigration’. Monaco, on the other hand, was top ranked for ‘Fiscal Considerations and Immigration’ but only ranks third bottom overall. Switzerland’s top spot is therefore not down to tax. Rather, tax is perhaps the headline while other factors are the meat in the sandwich, says Scorpio.
“To the mobile wealthy, Switzerland is still very nearly all things to all people. Right across the spectrum of criteria it scores well in this Index, offering the mobile wealthy the headline fiscal incentive as well as all the underlying criteria such as stability, employment and business opportunities, infrastructure and education for their children,” said Stephen Wall, Director. Adding: “Indeed, most anecdotal evidence from the market suggests Switzerland has been and will continue to be the biggest beneficiary of any moves away from London, particularly in the mid to HNW and above segments. This is in spite of the various attacks on the Swiss state from EU and US governments, the OECD and others.”
London is second in Scorpio’s first MWRI even amid the current aura of negativity surrounding its continued attractiveness to the mobile wealthy. The UK capital retains an inherently strong position vis-à-vis its competitors and is undoubtedly still the dominant centre internationally for the mobile wealthy community at all levels. London remains strategically well positioned between East and West with a convenient time zone, a strong and alluring professional services industry and numerous good travel links. All these factors help to further reinforce London’s perception as a hub.
What is clear, however, is that its positioning in second place is largely due to the damage done by recent regulatory and fiscal changes impacting the mobile wealthy. “The government’s stance has engendered a sense of mistrust and uncertainty among the mobile wealthy and their advisors. They definitely feel undervalued and over-scrutinised in the current environment,” said Sebastian Dovey, Managing Partner at Scorpio. “This is reflected in London scoring poorly for the fiscal considerations and immigration in this index. However, the fact it still takes second spot re-emphasises the fact that tax, an area where London has been shot in the foot more than once recently by its national Government, is but just one area of attraction,” Dovey adds.
According to Scorpio, 'Singapore is a demonstration that the East has risen fast as a destination for the mobile wealthy. This is a very positive reflection of this City’s growth plans which have seen it put in place a successful framework over the last decade implementing international best practice. Spurred on by the experience of the Asian financial crisis it has done much to make itself attractive to the mobile HNW community. Singapore is viewed by the mobile wealthy as the hub from which to do business in and throughout Asia and the Government has moved to make its fiscal environment attractive in the international environment.'
What is also abundantly clear is a clear distinction between the large ‘all-in’ global centres such as Switzerland and London and the smaller niche centres such as Jersey, Guernsey, Isle of Man, Cayman and Monaco. While these latter locations are rated among the top 11 locations for the mobile wealthy community and often offer them preferential treatment and opportunities, as one they struggle to compete with the major centres that can offer a wider and deeper range of benefits related to business, lifestyle, property and a concentration of other mobile wealthy residents with the same expectations, outlook and demands, notes Scorpio’s report.
This emerging trend is largely due to the larger global centres active courting of the mobile wealthy as part of their long-term strategy. There is a strong sense that the mobile wealthy feel that city hubs are on their way to tying up the market due to their scale and smaller centres will increasingly need to focus on offering niche opportunities, the report concludes.
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