Panama’s drive to become a leading center for private asset management is gaining momentum as high-net-worth individuals express a demand for robust alternatives in the wake of the financial crisis. Orchestrating a symphony of innovative products, experienced professionals, as well as personal and cost-effective services, Panama believes it can fulfill the demands of today’s affluent clients and their advisers. It offers all the favorite investment vehicles of high-net-worth individuals, while the also allowing investors to protect their wealth through the establishment of companies, trusts or foundations. Panama is also a competitive location for luxury asset management. It offers significant advantages for yacht registration, featuring the world’s largest shipping register. In addition, the country boasts a collection of prestigious residential homes that can be purchased for future occupancy or as an investment.
Benefits of Wealth Management in Panama
Panama’s stable economic climate, business friendly regulatory practices and experience in running a financial center place the country in an advantageous position in terms of wealth management. In recent years, the country has honed its expertise in many areas of finance, including banking, investment funds and corporate structuring. The high standards of the country’s service providers and its diversified economy have served to protect it from the ravages of the global financial crisis. While the global wealth management industry is at an inflection point, challenged by regulatory reforms and the loss of clients’ trust as a result of the financial crisis, Panama believes it can enlarge its market share and attract larger volumes of client assets. After having won respect for the excellence and resilience of its financial services industry, the country now aims to emulate the success of wealth management centers such as Singapore, Geneva, London and Hong Kong.
Panama’s strengths as a wealth management center lie in its holistic offering that caters for a wide spectrum of needs, including succession planning, investment advisory, corporate structuring, investment banking and even lifestyle administration. Private bankers and asset managers cater to all levels of wealth from the mass affluent to the high-net-worth individual. A wide range of investment vehicles is available – from simple trusts and company structures for families, to high value and more complex set-ups involving trusts, companies, investment funds and foundations for affluent clients. Equally important, the country has an excellent legal infrastructure, which is supported by experienced professionals that can combine all the separate strands into a unified and comprehensive wealth management offering.
In recent years, the country has been experiencing a steady influx of banks specifically established to offer investment banking, private banking and wealth management services to their wealthiest clients. Specialist wealth managers are offering Swiss-style private wealth management, while a large number of banks provide professional financial advice and products to high-net-worth, corporate and institutional clients. The country has also attracted a number of family offices, which are finding it a compelling alternative to traditional wealth management centers and have transferred all or part of their operations to the country. With some 80 trustees and 100 investment services firms registered in Panama, the sector is rapidly evolving. Local corporate service providers are also extending their offerings and Panamanian professionals such as tax advisors, lawyers and accountants are recognized to be among the best in the world.
Preserving & Growing
Panama is also offering solutions to those clients who are interested in wealth preservation through trusts and foundations and to those who want to achieve yield through different wealth management solutions. These structures allow the creation of customized solutions that will fit the most diverse personal and business needs, ranging from succession planning to estate management.
With more than 25 funds established in Panama, the country’s fund administrators and managers have a solid track record in setting up and managing different investment vehicles for institutional and individual investors. Asset management companies in Panama have launched fund platforms which are exclusively open to family offices and third-party managers to provide them with an efficient and cost-effective solution to enter the market.
Investors preferring physical assets are increasingly looking at Panama, too. Already a strategic port of call for superyachts crossing the Panama Canal, there has been growing demand from high-net-worth individuals for private yacht and aircraft solutions. The introduction of extensive tax-efficient incentives for the registration of yachts under the country’s flag, and the excellent infrastructure of the country’s marinas make Panama a logical choice to base a yacht.
Traditionally, Panama’s wealth management offering has been focused on LatAm and Europe. However, thanks to a growing number of double taxation treaties with high-growth economies in Asia and Middle East, Panama is set to cater to a wider audience. Panama is also keen to take advantage of global trends, most notably growth in Asia where the number of high-net-worth individuals is increasing faster than in the rest of the world. The country is also positioning itself as an attractive place for high-net-worth individuals to reside. Panama has recently introduced a residence program, zero tax on foreign income if they purchase property in Panama. The country has also enacted legislation offering foreigners the option of obtaining Panama permanent residence & citizenship through an Investor Program as well as a Second Passport Program.
International wealth planners and advisers find Panama the ideal location for the structuring, holding and managing of client’s assets due to its lower cost-base. Salaries and other operational costs are 20 to 30 per cent lower than in the traditional wealth management centers. Despite the lower cost, the level of service found in Panama is high, and many Panama located firms (which may be foreign owned) say they promote their staff with a ‘service mentality’ rather than focusing on sales, as is the case with other investment institutions.
The landscape for international wealth management has changed over the past 8 years. After the financial crisis, client expectations grew more sophisticated and competition intensified. Trust and reputation have become more important. Panama’s sound banking system, innovative investment vehicles, and its deep pool of legal and financial advisors are highly valued now, and are expected to pull a lot of clients to the country’s shores. Initiatives to update the country’s regulatory framework, as well as incentives for high-net-worth individuals, are aiding the growth and will likely lead to Panama playing a greater role in investor’s decisions when choosing an international wealth management center.
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