For decades Swiss Banks have enjoyed a reputation of anonymity, secrecy and security, and even today in a world of full disclosure, some of this still exists. However, given the fast changing world of financial regulations and the implementation of FATCA, foreigners and in particular American clients no longer enjoy anonymity or secrecy and some Swiss banks are reluctant to work with such clients.
However, there has been a large increase in the number of US Citizens or Persons turning to Switzerland for their banking services in recent years. It is common fact that Switzerland has a long history of economic and political stability and the Swiss Franc has held steady through many unsettling global economic events. But what are the advantages of banking in Switzerland?
- Banking Secrecy
This no longer exists, however the standards of privacy and discretion do, so people do feel safer when they use a private Swiss banker to look after their affairs. The Swiss Banking Act of 1934 prohibited bankers from releasing information on the existence of client accounts. This encouraged criminals and also the Nazi regime to hide wealth in the country.
Today, the Swiss authorities will cooperate with tax and criminal investigators and help uncover assets gained from illegal sources or activities.
- FATCA
Foreign Account Tax Compliance Act implemented by the US lawmakers prevents US Citizens or Persons from holding undisclosed assets overseas. In other words, as long as the assets are properly declared and reported to the IRS, then everything is legitimate. It is therefore important to use a bank or an advisor registered with the SEC.
- Asset Protection
If you are a US Citizen or Person and are sued in the US, the chances are your accounts will be frozen. However, assets held in Switzerland cannot be frozen by a US court, unless you are guilty of committing a crime or have participated in illegal activities. The US courts would then seek the assistance of the Swiss authorities.
- Total Reliance on the US banking system!
One of the big attractions of Switzerland is the custodian banking system, consisting of banks privately owned over generations which are involved in no form of lending, proprietary trading or M&A deals. This is stark contrast to the US banking system which failed in 2008 and looks set to fail again.
- Diversification
At the core of any wealth preservation or wealth management strategy is the principle of diversification, not keeping all of your eggs in one basket and therefore spreading or minimizing risk. Switzerland offers various levels of diversification in terms of currency, banking system, investment opportunities and geographical spread. Many US clients use the services of Swiss based RIAs who work on a global scale and not just focused on US markets and events.
How do I open an account?
The process for opening an account is fairly straightforward but does involve a good deal of information gathering for the client so that they comply with the ardent KYC information required by the Swiss regulators.
Choose a recommended investment advisor as opposed to going direct to a bank. Good advisors will have negotiated better terms for clients due to the volume of business they place with the banks and they will naturally enjoy close relationships and be able to make the right introductions on behalf of the client.
The process for opening an account may take a couple of months as the due diligence requirements are very high and a banker needs to fully understand your source of wealth and financial DNA.
Do I need to visit Switzerland?
The simple answer is no. Most of the top Swiss investment firms regularly visit the US and work closely with US based lawyers, tax advisors and CPAs so they are able to help with your local advisors. On the other hand, why not take a trip to Switzerland to see for yourself what makes the country so great! You won’t regret it!
How do I choose an Advisor?
There are currently more than 50 Swiss firms working with US clients. We have spent a great deal of time getting to know them and finding out who is committed to their clients and has a solid long-term reputation. Furthermore, the advisor has to be good with people and dealing with often complex family issues and must be willing to follow a client around the world. This is what we refer to as concierge banking.
Our top pick for 2018 was Adrian Vogel, CEO and Co-Founder of Heritage & Partners, based in Geneva. H&P is a small boutique wealth management firm working with some of the top families in the US and Latam. Adrian’s reputation is based on 25 years of working with UHNW families on behalf of the big Swiss banks. He regularly visits the US and ticks all of the boxes when it comes to being a true concierge banker for his clients.