U.K.-based family offices and their rich clients are moving assets – and themselves – to Switzerland. The shift seems not so much tied to Brexit, but comes in anticipation of a possible election win by Labour leader Jeremy Corbyn.
The vote by the British electorate to leave the European Union has swept away many certainties in the U.K. – and the handling of the departure from the bloc threatens to undermine a thriving economy and financial powerhouse. What's more, Prime Minister Theresa May effectively is leading a minority government backed up by the Ulster Unionists since calling a snap election in June 2017.
Now, the world's wealthy watch closely as London, one of their favourite booking centers, prepares for a possible change of regime. For the moment, Switzerland is the biggest beneficiary of this uncertainty.
«Five years ago, clients had organized assets so that they were booked out of London – for rule of law, political stability and for the quality of life it offered them. In comparison, Switzerland seemed expensive and isolated,» says a London-based family office executive handling Asian assets.
Change of Trend
The choice of veteran left-winger Jeremy Corbyn as leader of the Labour Party, the official opposition in Westminster, has had a pronounced effect on the wealthy domiciled in London. The fear of an anti-elitist sentiment driven by Corbyn has already damaged London's standing as a preferred domicile for international assets.
«Both liquid and non-liquid U.K. assets are moving to Switzerland,» says Kripa Sethuraman, head of family office at Accuro Fiduciary, a multi-jurisdictional trust and family office advisory firm. «This is a shift from the trend of the last few years.»
Recent Phenomenon
Although the uncertainty surrounding Brexit has been playing out since 2016, the flight of assets is a more recent phenomenon. «I have been told by clients that it is not about Brexit, to is really about Corbyn. If Corbyn does come in, we want to be ready to leave,» Sethuraman says.
«My principal feels squeezed out of both the U.S. and U.K. at the moment,» says the family office executive referring to tenuous trade relations between the U.S. and China and the fear that «foreigners will no longer be welcome» in the U.K.
Switzerland Considered First Choice
Despite a real estate portfolio focussed on the West Coast of the U.S. and Canary Wharf in London, the principal he refers to has made two trips to Switzerland in the year to date to get a feel for the place. «Liquid assets are going to all offshore centers but for physical relocation, Switzerland is the most appealing,» agrees Sethuraman, who says it is «ahead of Cyprus, Malta or Portugal,» as first choice.
