Over recent decades, a growing number of individuals and families have gradually become global citizens, forming cross-border ties through international travels, family moves abroad and business dealings and partnerships. But in today’s world of heightened political strain and economic challenges, being globally mobile is not just a question of changing lifestyles: it has also become an important tool for building resilience into businesses and assets in the face of increasing uncertainty.
“The ability to change residency or to have multiple citizenship has always been a nice-to-have for wealthy families,” says Nicolas Uster, Head of Wealth Planning at Pictet Wealth Management. “But in today’s unpredictable global environment, many consider it a must-have for people, assets and businesses alike.”
The ability to change residency or to have multiple citizenship has always been a nice-to-have for wealthy families, but in today’s unpredictable global environment, many consider it a must-have for people, assets and businesses alike
Nicolas Uster, Head of Wealth Planning, Pictet Wealth Management
A plan B for uncertain times
Micha-Rose Emmett, Co-founder and CEO of CS Global Partners, a consultancy providing citizenship and residency solutions, says that the resurgence of war in the Middle East and in Europe has brought to the fore people’s concerns about safety and security, making it a prime motivation for seeking citizenship in another country. “People look at the return of conflict in different regions, and they are nervous,” she says. “They feel that being limited to one jurisdiction is risky, and so they are looking for a plan B.”
In total, 97 countries deteriorated in terms of peacefulness this year, according to the Global Peace Index – the greatest number in any year since the index began in 2008. That can take its toll on families’ well-being and safety and also on companies’ ability to do business efficiently. It can also lead to questions about whether assets should be moved abroad – a decision that is much easier to take if the owners of those assets have alternative residency or dual citizenship.
Safety and security are a primary motivation in considering whether to move family, corporate operations or assets. Global pandemics are another. The severe lockdown policies enacted by many governments during the Covid-19 pandemic were a stark reminder of the importance of having options to defend geographic mobility. At the same time, deep disruptions to supply chains underlined the importance for companies of having geographic flexibility in sourcing and manufacturing operations.
Uster of Pictet Wealth Management says that the pandemic also made people realise that it is never too soon to think about legacy and, in particular, how best to pass on wealth to the next generation. “It was a wake-up call for all those who had put off thinking about what we all want to believe are far-off events,” he says. “All of a sudden, wealthy individuals and families wanted to revisit estate planning and, with it, a comparison between countries.”
It was a wake-up call for all those who had put off thinking about what we all want to believe are far-off events
Nicolas Uster, Head of Wealth Planning, Pictet Wealth Management
Alternative residency? The world is your oyster
Yet as Uster of Pictet points out, having a plan B to protect people, businesses and assets is a chance not only to plan for uncertainty, but also to explore the best that other countries have to offer. “People have understood that while the world is full of challenges, it is also full of opportunity,” he says. “By moving or by changing citizenship, you increase choice in terms of almost everything – from the temperature and climate you prefer to live in to the possibility of opening new revenue streams for your company.”
Countries around the world increasingly understand the benefits of offering paths to residency and citizenship – namely, bringing new capital inflows and specialised skills – and a healthy competition is emerging to attract top talent. Some countries, including New Zealand, Italy, Japan and the US, even offer incentives to sweeten the deal.
People have understood that while the world is full of challenges, it is also full of opportunity
Nicolas Uster, Head of Wealth Planning, Pictet Wealth Management
In addition to financial incentives, many countries offer citizenship or residency through investment programmes, commonly referred to as “golden visas”. According to advisory firm Henley & Partners, more than 100 countries now offer these programmes, including 60 per cent of EU nations. A key driver of their growing popularity is the increasing geographical dispersion of families. When children or grandchildren often study or live abroad, the ability to travel freely to visit loved ones has become more important than ever.
But Peter Vogel, Professor of Family Business and Entrepreneurship at the International Institute for Management Development (IMD) in Lausanne, argues that one of the biggest advantages of alternative residency and multi-citizenship is that it can help individuals and families to build resilience by providing greater opportunities to diversify assets across countries.
This is particularly important in today’s rapidly changing environment. “You need to diversify geographical exposures in the same way that you diversify investments across asset classes so that no single entity controls things,” he says. “People are starting to think in terms of ‘multi-jurisdictions’ just as they think in terms of ‘multi-banks’. It’s just prudent planning because you never know what is going to happen.”
People are starting to think in terms of ‘multi-jurisdictions’ just as they think in terms of ‘multi-banks’. It’s just prudent planning because you never know what is going to happen
Nicolas Uster, Head of Wealth Planning, Pictet Wealth Management
Safeguarding assets through diversification
This year’s World Citizenship Report survey found that the ability to more effectively manage investments, portfolio diversification and wealth planning would be a prime motivator for second citizenship for 40.5 per cent of respondents in relation to financial and business goals. This outstripped last year’s top priority – pursuing work and employment opportunities – by 5.5 percentage points.
In addition to the benefits that “golden visas” bring to the host countries, alternative residency and dual citizenship can add resilience to portfolios through additional diversification of assets and asset allocation. In years of heightened political uncertainty, including this year’s elections across major economies, greater global mobility through alternative residency can help to hedge against associated trade and inflationary risks.
Yet Pictet’s Uster says that diversification across geographies also makes thorough planning essential – both to make the most of what is on offer and to understand the implications of international law and how it affects individuals with alternative residency or dual citizenship. “It’s important to have a plan B or even a plan C, but those plans involve complex decisions that need to be taken carefully.”
