SWITZERLAND: STILL THE WORLD’S MOST IMPORTANT ASSET MANAGEMENT CENTRE
Despite all the recent hype and publicity regarding the UBS case, and the recent historic dismantling of Swiss banking privacy in terms of certain accused tax evaders, Switzerland is still the world’s leading private banking, wealth management and offshore asset protection centre. I’m not saying it’s the best, as there may well be other banking solutions for flying under the radar but, it’s the most important.
To correctly visualize the places where serious money and assets are discreetly managed, consider this: All the money managed in the Riviera and Monaco’s glitzy banks, is far less than what is managed in one small obscure town in southern Switzerland called Chiasso. And all the money managed in Chiasso is a mere speck compared to the assets run from Zurich. Switzerland still is the country for private banking. It is the place where ultra high net worth individuals have their secret accounts. But what is rich? And how secret is secret?
ARE THE SUPER RICH STILL PROTECTED IN SWITZERLAND?
In a word, no! No more so than any other private banking haven. Swiss banking secrecy now has more holes than Swiss cheese.
We have all read and seen movies claiming how some super big-shot ultra-rich people somehow buy immunity and are above the law. Unfortunately (for them), even in Switzerland local politicians and journalists love to bring down big fish. Having a few billion in assets may get you the best lawyers, but it doesn’t prevent embarrassing or costly episodes.
The truth is that most of the super rich are running more scared than we ordinary PTs are. They have more to lose. The super-rich (the people with going businesses and visible assets) are far more vulnerable than a guy with just a few million secreted in gold bullion in safe deposit boxes., who is unlikely ever to have a problem.
There are many ways to protect financial privacy and ‘bury’ assets so that the assets become invisible. I write about such techniques from time to time in Grandpa’s Gems, and if you are smart and read carefully you will see a number of them mentioned in Invisible Investor. You need to read between the lines because once such techniques are published or advertised, they become widely used. Then they are targeted as part of the everlasting cat and mouse game with crooks, conmen, plaintiff lawyers and Big Brother. Game Over.
If you have serious assets to protect, it may be well worth our rather hefty fee to meet anonymously (we don’t need or want to know your real name!) with our low profile PT specialist in wealth preservation. You could go over what you are doing now and what else you should be doing to protect your ass and your assets. We have several recommended and very discreet consultants. We will always recommend one from a country where you are not connected.
Bottom line? The super rich of today no longer see Switzerland as the best or the only place to simply hide assets. There are other offshore centres better for that. Even the Swiss banks know that, and as I write they are no doubt updating their own PT-style contingency strategies. And I’m certainly not going to write more about them here for Big Brother and his cronies to read about!
The ultra-wealthy hold their assets in Switzerland not because of the secrecy, but because of the extremely high quality of wealth management and private banking services that Switzerland still offers. But these days those assets are more and more being reported or registered in the home country as required by law. It is the good respectable Swiss management that is regarded as essential for asset preservation.
ENHANCING YOUR BANKING PRIVACY WITH CORPORATE STRUCTURES
Should you use corporations, alternate identities, straw men, lawyers, trusts, foundations, Anstalts, New Zealand Charitable Trusts or variable IRA self-controlling securitized three tier multiple protected cell holding companies wrapped in Cayman-managed St Kitts domiciled annuities on your dog’s life? The answer depends upon your personal circumstances.
What kind of personal circumstances? These include your domestic situation (marriage), the way you want things distributed upon your demise and how much of a target you are or might be for Big Brother.
What are the Estate and Inheritance Taxes in your country? They vary tremendously.
In Italy, in a bid to get money out of Switzerland and back into the local economy, inheritance taxes were completely abolished. Additionally, a one-time tax amnesty was granted to anyone who brought assets back from abroad and paid a token 2%. So much money poured back into Italy that the major Swiss banks opened more branches in Italy to receive and manage the money moving across the border. They even sent some of their Italian speaking officers to the new Italian branches so that their best customers could still have the same banker! If the disorganised Italians could do this years ago, who ever would have believed that Swiss banks would protect their clients from the American government in 2009?
What is the best course of action for you? Much depends on how much you have to protect. A one-man service business throwing off 75,000 Euros or dollars per year is a vastly different kettle of fish from someone with fifteen or fifty million in assets or a complex business partnership or family office.
HOW TO OPEN OLD STYLE SWISS BANK ACCOUNTS
Want an account like you saw in the movies? You can still walk into Julius Baer, Rothschild, F & L, Hensch or almost any of the legendary Swiss ‘private banks.’ The reason they were called private banks is that they were owned by wealthy private individuals who under Swiss law were personally liable for the obligations of the bank. If a bank failed, bankruptcy was not an option. It was disgrace and jail. As a result, we know of no old line private banks that ever failed. Due to globalization and the need to serve customers abroad, almost all the old ‘private banks’ have now been bought out and are subsidiaries of bigger international banks.
Anyone can get a personal private banker assigned in an elite bank with about €300,000 opening deposit. When we say walk in, you will of course need an introduction, identification and references. You can’t just walk in anonymously off the street with a suitcase full of cash and open an account, as was possible prior to 1985.
A private banker is simply a man or woman assigned to look after your account and perhaps 50 to 200 other similar accounts. You get to deal with one person who will know your voice on the telephone and he’ll be able to do such things as stock or commodity trading for you. The charge for this service is around 1% per year of your total account balance if they manage the money, less if you make the decisions. The percentage drops as your account gets bigger.
All banks are happy to give you their fee schedules. They tend to be all the same – no laws against monopolies in Switzerland! Price fixing is the norm, not the exception. But your banker can reduce or waive fees. He can also send out your money anywhere you wish by wire transfer on the basis of an oral conversation. Such conversations are recorded and must usually must be confirmed by fax or letter.
You won’t get the red carpet, free theatre tickets and complimentary $200 lunches with the minimum deposit – but your banker will be friendly enough. One of our more charming clients just reported (as we go to press) that he received a free baseball cap, umbrella, leather dossier case, and a pretty good bistro lunch when he opened a minimum account – with the promise of more business later. As all of the above ‘free gifts’ prominently displayed the bank’s name and logo, we concluded that this particular private bank (and maybe most Swiss Banks) were no longer promoting secrecy or privacy like they did in the good old days of suitcase banking.
Next step up? If you have over $5,000,000, that kind of money is considered a very desirable and respectable account for an elite Swiss private bank – even though these days that is the value of an upper middle class home in London, or California.
There are more than 400 different banks in Switzerland. That is banks, not branches. The bigger banks have hundreds of branches.
Every single bank tries to specialize in something to differentiate themselves from the crowd. One may have a fine art department to finance, bid on, store and otherwise help collectors of expensive paintings. Another may specialize in lending money and taking care of clients who own forest land or international hotels. Several pride themselves for having expertise on mergers, arbitrage or acquisitions. Others may specialize in handling container loads of dollars for the Cuban, Libyan and Iranian governments (That was UBS, in an earlier run-in with the US government)
Post your comments, thoughts, related personal experiences, corrections or questions below.