News that Switzerland may be forced to relax some of its banking secrecy laws appears not to have affected the alpine country’s appeal among very wealthy individuals as a place to live, a new survey shows.
The country beat London, Singapore, New York, Hong Kong and Jersey – in that order – as the preferred residential jurisdiction for the very wealthy, Scorpio Partnership, the London-based wealth management consultancy, said.
It was the first time Scorpio has conducted such a study, which was based on more than 400 interviews of wealth managers, including lawyers, accountants and bankers, looked at 11 popular residential jurisdictions, and was conducted between 2008 and April 2009.
Scorpio said its Mobile Wealthy Residence Index (MWRI) showed that the mobile wealthy “are choosing a jurisdicition in which to reside on a far wider range of factors than just the headline rates”.
Although the concerns of such ultra-high-net-worth individuals as Russian oligarchs were included in the study, Scorpio said the majority of those in what it defined as the "mobile wealthy" category were professionals such as doctors, dentists, architects, lawyers, accountants, entrepreneurs and financial services executives.
The release of the Scorpio study follows comments made last week by Investec Asset Management’s global strategist, Michael Power, who refuted the observations of some other experts that London’s days as a global financial centre may be numbered.
It also came after published reports that a number of high-profile UK business executives, including Odey Asset Management’s Crispin Odey and Terra Firma’s Guy Hands, were considering leaving the UK or had already left in protest at the government’s plan to hike the top rate of income tax to 50% from 40%.
“To the mobile wealthy, Switzerland is still very nearly all things to all people,” Scorpio Partnership director Stephen Wall said in a statement accompanying the MWRI report.
“Indeed, most anecdotal evidence from the market suggest 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.”
Switzerland tops for "sophistication/culture/infrastructure"
Although not springing immediately to some minds as a hotbed of theatre, dance and art, Switzerland nevertheless came top in the Scorpio chart for “sophistication/culture and infrastructure”, ahead of, in order, Monaco, New York, Singapore, Hong Kong and London. This was due mainly to such infrastructural advantages as its transport and telecommunications systems, Wall said.
Switzerland also headed four of another nine criteria rankings that contributed to Scorpio’s main league table – including economic and political stability, legal considerations, proximity and convenience, and education for children.
London, which Scorpio said had taken a hit by the UK government’s recent moves to “penalise” the mobile wealthy by raising taxes, came top in only one category, that of the “concentration/critical mass” of other resident high-net-worth individuals.
Singapore took first place in the “employment and business opportunities” and “security” categories, while New York was first only in the “depth of financial services sector” category.
Small v large centres
In the beauty parade of places wealthy people might live, such smaller “niche” centres as Jersey, Guernsey, Isle of Man, Cayman and Monaco “struggle to compete with the major centres” the Scorpio study notes, in their ability to offer a wider and deeper range of benefits relating to business, lifestyle, property, as well as in their concentration of other mobile wealth residents “with the same expectations, outlook and demands”.
“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 Scorpio study notes.
One of the most curious findings was how the wealth managers surveyed rated the 11 jurisdictions on the basis of “availability of quality housing”. Dubai, with its housing stock of newly-built, air-conditioned glass and steel towers, came first, followed by the Isle of Man and then, in order, London, Switzerland, New York, Singapore, Cayman and Hong Kong.
Wall said this ranking reflected the ease with which new arrivals are able to acquire housing, as well as what they get for their money. In some jurisdictions, such as Guernsey and Jersey, housing supplies are quite limited, particularly to those who are not already resident, while others, such as London, are expensive compared with other cities.
Scorpio Partnership’s Mobile Wealthy Residency Index (MWRI):
• New York
• Hong Kong
• Isle of Man