Why Wealthy Americans Still See Switzerland as a Safe Harbor for Their Assets
Dominique Spillmann, founder and CEO of swisspartners Advisors Ltd.
One of the most important concerns for wealthy individuals is finding a jurisdiction that is stable in terms of its legal, political, and economic environments. Those are in fact Switzerland’s strong points. With its over 700-year-old history, well-known political stability, and approximately 200 years of the same currency, Switzerland has established trustworthy partnerships and a secure political and economic framework. This provides fruitful grounds for various domestic and international corporations to prosper without the worry of too much government interference, international conflict, monetary insecurity, or inflation.
A second and more crucial concern when comparing jurisdictions is knowledge and expertise in global banking and asset management. This has played an essential role in attracting wealthy individuals, families, trusts, and foundations from around the world to Switzerland, which has one of the oldest and strongest banking traditions and extensive wealth management experience. Top that off with its geographically central location, which contributes to Switzerland being one of the leading private wealth management centers. It is almost impossible to find another wealth management industry that is not only open but also capable of understanding structures from multiple foreign jurisdictions. Even in the USA, one has a hard time finding custodians with the knowledge and willingness to deal with structures in non-US jurisdictions, let alone any company, trust, or insurance structures in countries beyond its borders.
Thirdly, clients look for high levels of professionalism and responsiveness, and a deep understanding of their markets — in the case of our clientele, the USA. The service industry is by far the most significant sector in Switzerland, generating approximately 74% of the country’s GDP. This means that not only do we have a copious amount of knowledge but also a large talent pool to select from. There is also a sizeable market catering to individuals and families in the USA. These are independent investment advisors and banks with in-depth knowledge of the market, often also producing sophisticated tax reports for US investors.
An unsurpassed wealth management hub
From the perspective of American investors, it is challenging to find alternative locations that can match what Switzerland has to offer. These days there is substantial talk about Dubai and the growth of the private banking industry there. For many reasons, however, there is little knowledge of or focus on US clients who are not in the UAE. Singapore is another jurisdiction that has an established banking industry, yet for those seeking stability, a similar cultural background, and a strong focus on customers from the USA, the city-state’s offering is incomparable to that of the Alpine Confederation.
Switzerland is among the leading nations when it came to implementing new standards and regulations. In the last five years in particular, the Swiss regulator FINMA has introduced and enforced new rules and regulations upon financial institutions. These relate to ensuring the suitability of investments, defining risk appetite and capability, and educating investors about financial instruments, which all result in the appropriate categorization into adequate investment mandates. The enhanced framework aims to further strengthen the attractiveness of the Swiss financial industry for wealthy individuals who are looking for a safe harbor for their assets. This will ensure that the Swiss wealth management industry maintains its global leading role.
This essay was first published in the Henley Global Citizens Report 2022 Q3.