The rising fears of HNW investors are driving wealth managers in the offshore wealth management market to expect rapid growth. As the pandemic enters its third-year, investors are more concerned about the negative economic impact of the pandemic. This is leading to divergence in asset allocation trends in onshore markets. In 2022, offshore investing will be very active.
GlobalData’s Offshore Preferences Analytics shows a steady rise in wealth booked offshore by HNW investors. There is growing consensus that this percentage will continue to increase in 2022. Just over three quarters (75%) of private wealth managers who contributed to HNW Offshore Preferences Analytics’ data expect their HNW clients will increase their offshore wealth (already at record levels) by 2022.
The pre-pandemic boom in international business activity was the main driver of offshoring to all regions. This time, however, the results are not only mixed but also less positive. HNW investors will be motivated to relocate their money offshore by market volatility, which is closely followed by local market downturns and greater political instability. North American market volatility is a major concern, as well as currency volatility, which will be exacerbated by high inflation. Fears of market volatility are also a major factor in Europe, which is often the most gloomy of all regions. Although the reasons for this may vary, investors are increasingly moving offshore to avoid investing in onshore assets.
This defensive attitude to offshore investment flows is something wealth managers must acknowledge. The best investments will be able to withstand recessions and other times of uncertainty. These HNW investors are still attracted to safe-haven assets and should be used accordingly.
Why would you expect HNW wealth to offshore to grow?
