The private banking landscape is undergoing a transformation fueled by technological advancements, evolving client preferences, shifting regulations, and emerging geopolitical dynamics. Key players in this reconfiguration include Singapore, Switzerland, Dubai, Hong Kong, the UK, and the US, each skillfully recalibrating their strategies to capture affluent clientele. 

The Allure of Private Banking Hubs

A city’s attractiveness in private banking depends on several key factors. Economic vitality, exemplified by robust GDP per capita and healthy growth, attracts private wealth and cultivates a conducive investment environment. This should be supported by a well-developed financial and legal infrastructure that provides choice in terms of service offerings, as well as stability and reliability for peace of mind. Lastly, the city’s demographic characteristics – population size, a high density of wealthy individuals, and rising demand for specialized wealth management services – crystallize its standing as a premier hub for private banking activities. 

Based on many of these criteria, it may come as no surprise that the long-standing traditional private banking destination of Switzerland still tops many global rankings. According to Deloitte’s latest International Wealth Management Centre Ranking, the country takes the lead in overall competitiveness and asset growth as measured by absolute International Market Volume (IMV). 

Looking closer at the latter statistic in isolation, the UK and the US follow closely, readily drawing institutional investors and high-net-worth individuals (HNWIs) to their major booking centers. That being said, these historical hot spots of the Western world no longer stand uncontested, and competition is heating up in the East amid booming growth, targeted policy intervention, rapid innovation, and seamless intraregional connectivity. It is impossible to speak about global wealth management without mentioning the formidable financial capitals of Singapore, Hong Kong, and Dubai.

Singapore’s Ascension and Hong Kong’s Recalibration

While Hong Kong has historically been a leading player in the Asia Pacific private banking arena, it is experiencing a recalibration. Hong Kong’s political and regulatory uncertainties, juxtaposed with Singapore’s stability and predictable rule of law, act as a compelling gravitational force for wealthy Asian families to start reconsidering their options. 

While Singapore and Hong Kong have always shared a healthy rivalry, there is a growing voice of industry professionals and clients who see more explicit long-term advantages of being based in the ‘Lion City.’ Deloitte’s competitiveness ranking even put Singapore ahead of Hong Kong, with the city-state praised for an increasingly supportive tax framework for family offices and HNWIs. In July, the Monetary Authority of Singapore (MAS)introduced revised tax incentives for single-family offices to boost the domestic wealth management industry. 

While Hong Kong has not entirely lost its appeal as a private banking destination, geographic diversification is becoming more important when assessing appropriate domiciles for asset location. Attractive taxation policies, technological innovation, regulatory excellence, and diverse clientele position Singapore as a closer rival to Switzerland’s dominance. 

The Rise of Family Offices: Wealthy Individuals Establish Roots in Singapore

Singapore’s international appeal is not going unnoticed. An increasing number of HNWIs are establishing themselves in Singapore, with the number of single-family offices in the market estimated to have more than doubled in just two years, from 400 at the end of 2020 to 1,100 in 2022. In addition, prominent business leaders such as Indian billionaire Mukesh Ambani, hedge fund magnate Ray Dalio, and Google Co-Founder Sergey Brin have all selected Singapore as the base for their family offices, adding to the market’s attractiveness. 

According to the 2023 Global Family Office Compensation Benchmark Report by KPMG, approximately 9% of the world’s family offices are in Asia, with 59% domiciled in Singapore – a truly impressive feat. To support all this growth, private banking and wealth management firms have quickly built out their in-market capabilities to meet the rising demand for sophisticated family office services. In the process, some firms have seen significant success in the current environment. Farro Capital, a Singapore-based multi-family office set up at the end of 2022, brought more than US$1 billion in assets under management (AUM) within four months of its inception. 

“Wealthy families have become more discerning and sophisticated when it comes to managing their wealth,” explained Hemant Tucker, Co-founder and CEO of Farro Capital. “We have built our holistic platform to cater to the increasingly global ambitions of our clients and the geographically diversified nature of their assets, which requires seamlessly connecting traditional and emerging wealth hubs.“

The Next Chapter: Wealth Migration and Sovereign Diversity in a Multipolar World

This global interconnectivity and wealth mobility between geographic locations will become more critical in the coming years. There is a growing realization that growing and protecting wealth depends just as much on asset location as it does allocation. Furthermore, in an increasingly multipolar world, there are strategic advantages and lifestyle-related benefits of being empowered to choose where one decides to reside.

We are witnessing more families branching out to ensure their legacies are well-positioned to endure uncertainty. The procurement of alternative residencies or citizenships is a burgeoning asset class in the holistic family portfolio. Individuals with the foresight to plan stand to gain unparalleled access to the bridges connecting the world’s most powerful wealth hubs. The good news is there are a growing number of options available to families, including investment-driven residency initiatives such as the UAE’s Golden Visa, Singapore’s Global Investor Program (GIP), and the US EB-5 VISA.

The global population of ultra-high-net-worth individuals (UHNWIs), those possessing a net worth exceeding US$50 million, is estimated to approach 372,000 people by 2027. Many will likely come from emerging Eastern wealth hubs across the Asia Pacific and the Middle East instead of the Western world. To put a number to it, the same study forecasted that a staggering 33% or 123,000 of these newly minted UHNWIs would come from Asia Pacific alone. While impressive, we can be sure that this wealth will not remain static; it will move fluidly in search of the best home – often more than one.

References: 

• Global Wealth Report 2023, UBS 
• Financial Times; https://www.ft.com/content/dfd0f5da-66fb-451a-9a98-501e928c074c 
• The Guardian; https://www.theguardian.com/business/2021/feb/24/london-dollar-millionaires-new-york-covid-crisis-assets-wealth 
• MAS (Monetary Authority of Singapore)
• Bloomberg, https://www.bloomberg.com/news/articles/2023-08-28/uae-says-brics-membership-isn-t-hedge-against-western-alliances
• The Straits Times, https://www.straitstimes.com/business/banking/billionaire-mukesh-ambani-to-open-family-office-in-singapore-sources-say
• Asian Investor, https://www.asianinvestor.net/article/wealthy-indians-line-up-to-open-family-offices-in-singapore/484942
• Business Times, https://www.businesstimes.com.sg/international/global/singapore-home-more-half-asias-family-offices-report
• Asian Investor, https://www.asianinvestor.net/article/talent-hunt-intensifies-as-singapore-family-offices-top-1-100/485425
• Deloitte, https://www2.deloitte.com/ch/en/pages/financial-services/articles/wealth-management-centre-ranking.html

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