Despite a global economic slowdown amid trade and geopolitical tensions, wealth and population grew by eight percent in Asia-Pacific in 2019.1 Enterprising global families in the region are erasing physical borders in search of more opportunities to build and protect their wealth and legacy.
A generation shaped by globalization
The 2019 Wealth Opportunity Index, compiled by the Economist Intelligence Unit and commissioned by RBC Wealth Management, points to hotspots dominated by Asia with four economies in the region ranking in the top five.2
An increasingly globalized group of high-net-worth individuals (HNWIs) is beginning to emerge, with younger HNWIs in Asia substantially more enthusiastic about foreign investing.3 And Canada is one of the countries on their list.
Terence Chow, head of RBC Wealth Management–Asia, explains why families in the region are pursuing opportunities in Canada, “High-net-worth individuals view Canada as a destination of choice, whether that's for future immigration considerations or for asset allocation and portfolio diversification. Canada is one of the places that has a healthy emerging technology and artificial intelligence industry and sector. With ESG and sustainability-related themes more pronounced, Canada is also well-known and active in this space."
Another reason for sending wealth across borders could be the dynamics of family. “The first generation [of HNWIs] may have sent their children to study abroad and this next generation planted roots in Canada after their education," and when it comes to wealth transfer, Chow points out their parents in Asia may consider relocating to Canada to join their children. This is an example of how a family situation necessitates wealth to be placed across borders.
Banking on diversification
One key motivation behind cross-border wealth planning is diversification. Many of Asia's global families in the region are connected to Canada by education, property, lifestyle or business. And as these families cross borders, so does their wealth.
“In a lot of cases, it starts with their children going to school in Canada. And as roots are planted there with other parts of the family on the move, global diversification takes place. For example, a family might have business in China while also buying property in Canada—that is a form of global diversification," explains Michael Reed, head of RBC Wealth management-Southeast Asia and chief executive, RBC Singapore Branch.
Reed adds that diversification also allows investment portfolios to have a more globalized edge and Asian HNWIs can look beyond local shores and take advantage of other opportunities across the continent as well. “If you have all your money in one country, you are exposed to the political, economic and policies of that one country."
The cross-border connection
When your wealth moves overseas, there can be implications. For HNWIs with an international lifestyle, this often means looking for an equally international wealth manager with a regional presence. And the combination of global resources and a distinct understanding of jurisdictional regulations becomes critical when business ventures are involved.
When it comes to moving wealth to Canada, Chow lists expertise, knowledge, breadth and depth of services as a few important things to look for in an advisor. “You would want a partner and service provider that is strong and stable as well."
Chow highlights the ability to aid families to navigate what's important in their lives and to assist in planning their financial future as important attributes of a wealth manager.
As portfolios become global, the advisor-client relationship also becomes complex due to the nuances of cross-border regulation. “Does the advisor you work with understand the Canadian market? Or understands why a trust may have unintended consequences when one becomes a Canadian resident?" Reed asks. He emphasizes working with an advisor that understands both the local landscape in Asia as well as Canada, and can help clients avoid pitfalls and reduce complexities.
Tailored solutions for dynamic needs
Asking the right questions is another aspect to look out for when searching for the right organization to manage your wealth across borders. Chow says the key question that should be asked is, “What is the endgame?" He believes it's important to work with an organization that wants to understand the endgame first—instead of jumping into different solutions without a plan.
“It may sound like it takes more time but that should be the case, rather than simply getting something going," Chow explains.
“As you introduce different countries, you also introduce cross-border complexities and you want someone who is well-versed in planning across these different variables." Chow sums up the key to success—finding a trusted partner to help develop a personalized and globalized wealth management journey.
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