The concept of offshore investment is just that, relocating some of your wealth to another country or jurisdiction, usually as a way to diversify your portfolio or take advantage of higher returns or tax efficiencies on offer.
As with any investment structure, portfolio asset or retirement planning vehicle, offshore investments can be highly beneficial, provided your affairs are correctly managed and you have the right independent advice to make informed decisions.
Our previous guide to Understanding Offshore Investment Management covers the basics and explains the legalities and advantages of offshore funds. Here, we explore further and look into the core advisory services you might consider, the types of offshore asset management approaches, and the importance of a personalised strategy.
You can also download our free guide to Offshore Investment for additional guidance.
What Is Offshore Asset Management?
Offshore asset management refers to professional financial advisers, wealth managers and tax experts who provide bespoke advice and ongoing management services to help you select the optimal offshore investment destinations and products and maintain oversight of how your investments are performing.
Light touch advice might include recommendations about tax efficiencies or legal reporting requirements. In contrast, longer-term offshore asset management includes continual risk exposure assessments, estate planning and taxation advice as regulations change.
Investors can choose to make those decisions alone, but we always suggest speaking with a suitably experienced adviser before making any big decisions that affect your wealth. Particularly for expats, the opportunities and potential drawbacks of poor decisions are more financially meaningful, so an astute evaluation of your circumstances and financial expectations is a solid starting point for a successful investment strategy.
Considerations in Offshore Portfolio Management
Investing in offshore products and assets is a common component of an estate planning exercise. It may be possible to protect your wealth for future generations with certain products or funds that attract low or no inheritance tax.
Of course, this isn’t a blanket statement because the outcomes will depend heavily on your place of residence and that of your intended beneficiaries, changes to tax regimes in any relevant jurisdiction, and the nature of your investments and portfolio spread. Examples may include offshore trusts or asset restructures, but the right solutions should always cater to your circumstances.
Another benefit of offshore asset management is that you can minimise your tax exposure legally and in full compliance with the relevant rules by picking foreign investment regions that offer reduced tax rates to attract overseas investment.
To qualify for many offshore investment schemes, you often cannot live permanently or run a business in the same location, depending on your asset ownership structure, so your strategy should consider:
- Countries in which you are a citizen
- Where you currently live
- Locations of other assets, including businesses
- Where your family or heirs live
- Future plans to relocate
Some countries exempt foreign investors from paying capital gains tax, for example. Still, you need to assess your arising income tax liability on returns and portfolio transactions to have a clear idea of the total tax picture.
This analysis includes looking at the dual tax treaties present in your current home country and whether such agreements exempt you from potentially paying two sets of tax liabilities on one investment return or capital gain.
Choosing the Right Offshore Asset Management Approach
As an accomplished wealth management team specialising in financial advice for expatriates, Chase Buchanan believes that professional expertise is invaluable in making future-proof offshore investment decisions. A fund manager, financial adviser or asset manager can take responsibility for recommending investments, but the final decisions should always be at your discretion.
Our role is to stay ahead of emerging and changing market trends across multiple countries to ensure we pre-empt issues and make suggestions that align with your risk appetite and long-term financial aspirations.
For example, your offshore asset manager might advise on one asset class over another, examine currency fluctuations, or select stocks with excellent long-term stability and growth potential.
There is also a difference between a passively managed offshore investment portfolio and a managed investment approach:
- Actively managed wealth aims to outperform benchmarks and targets set, such as performance rates linked to a particular stock index. Portfolio changes are more likely to occur more often as the benefits and risks connected to an asset change.
- Passively managed portfolios act as an investment holding and tend to be lower risk and more diversified as a long-term investment that tries to replicate general market returns. Passive investments usually remain in situ even in adverse market conditions but aim to provide an overall positive return using a buy-and-hold strategy.
The trading approach that best suits your offshore investments will rely on your intentions and expectations from your returns, such as when you expect to call on your offshore wealth to finance retirement.
Offshore Asset Management for Expats
Offshore investment isn’t suitable for every expat, and anybody deciding whether offshore asset management is right for them should think about their investment knowledge, attitude towards self-managing assets, and how their wealth impacts their lifestyle.
Time may be a key factor since active asset management requires ongoing attention to monitor market movements and trends and sometimes make quick decisions about how to respond. Using a skilled offshore asset management professional may preserve your net worth, safeguard your life savings, and maximise the value of your portfolio and estate while reducing unnecessary tax exposure.
Chase Buchanan Wealth Management offers a comprehensive offshore asset management service as an accredited and highly regulated financial advisory firm with local, on-the-ground teams across Europe, the USA and Canada available to provide direct advice.
We work with our clients over time, getting to understand your portfolio, requirements and future plans, enabling us to make tailored recommendations to support your overarching financial goals. If you are interested in offshore investment, accessing offshore asset management expertise, or reviewing your current portfolio to determine whether there are efficiencies available, please get in touch at your convenience.