Monaco's favorable financial environment generated a great development of bank services. Hence the creation and continuous improvement of a wealth management system. Wealth management goes beyond financial planning, dealing with all the aspects of the client's financial life from wealth accumulation, wealth protection, speculating all possibilities for tax-advantaged distribution of wealth during life and the tax-advantaged distribution of wealth at death.
Wealth Management Advisor
Wealth management services are usually performed by a bank or a financial services firm but it can also be provided by a broker.
The wealth management consultant should have some specific abilities:
- should offer investors unbiased advice
- should have skills in financial planning, portfolio management
- should be capable of helping clients develop a broad financial plan and a detailed investment strategy
Private Banking Industry
The majority of the banks in Monaco dealing with very rich persons offer private banking expertise to their clients. Special services are offered to individuals with high liquid wealth, more than €100,000. Private banking and wealth management are closely interrelated. Private investment banking implies investment management offered on a personalized manner beyond the confidential relationship that binds the client and bank together. Also the division of that entity which does loans, savings, and checkings belongs to private banking.
Private banking also implies private equity: clients are given special opportunities to invest in shares of companies not available for the general public to buy in a stock market.
The immediate relationship with private banking is created between the financial adviser and client and is not necessarily on a lending-borrowing basis, although ideally it should be. There is the possibility of offshore private banking. One may solicit only this service without actually being involved in any operations with the bank. The service will be rewarded by a fee.
Wealth Management Services
A Wealth Management Advisor can create a wealth management and estate plan tailored to specific values and family situations and provide expertise and services in areas such as:
Investment management
The main goal of such services is to help clients implement their personal financial goals. Counselors offer services of plans customization, strategy and analysis, backed by risk management in order to optimize the client's portfolio moving toward financial goals.
- Asset allocation strategies
- Family-based investment policy
- Real estate investment advice
Estate planning
The goal is to minimize transfer taxes and maximize wealth by creating an optimum wealth transfer plan and regularly reviewing it.
Business Estate Planning
The wealth management advisor will interrelate the estate plan, the insurance policies and the business estate to help avoid legal issues, taxes and family disputes. It involves a succession management plan, a business inheritance plan and business valuation. The business valuation is necessary to be made by professionals on a timely basis, to avoid ulterior possible disputes in court for estate taxes reasons.
Debt management
Wealth advisor will help manage professionally your liabilities in relation to your assets.
- Bookkeeping services
- Fiduciary services
- Private banking
- Mortgages
Tax management — optimization of tax payment
The advisor provides services of organizing tax records, filling payments, estimating tax payments and audit representation. The final goal is maximizing and protecting the assets value by minimizing the tax burden.
- Estate tax planning
- Offshore planning tax
- Retirement planning
The counselor evaluates client's spending needs at retirement and potential sources of income and creates a plan. These analysis being made years in advance, the client is permitted to have time to prepare the old age years. - Inheritance/succession planning — wealth and business succession
- Trust services/Legacy wealth management
The counselor analyses the client's property and offers advice on the optimum types of assets to be placed in a trust. The goal is to preserve the client's legacy by maximizing the value of the client's estate.
Risk management
Means ensuring protection against potential risks that could diminish asset base.
While evaluating property, the wealth management advisor quantifies the financial loss potential and determines which assets need insurance and whether there is need for specialized coverage.
- Asset protection
- Property and Casualty Insurance
Trusts
A legal entity allowing property/wealth transfer by the donor/settlor to a trustee for who agrees to hold that property and invest it for the benefit of other persons, the beneficiaries or donees.
Features
- The trustee administers and manages the property.
- Ownership is shared between the trustee and the beneficiary.
- All the profits go to the beneficiary.
- The only expenses necessary for settling a trust are the setting up tax and an annual fee for the trustee.
Trusts can be located anywhere in the world (in the settlor's home country or offshore) on condition that the jurisdiction under which the trust is established recognizes the legal concept of trust.
Trusts are recognized by many offshore jurisdictions; in some cases there is also the possibility to choose which country's laws will govern a trust.
In Monaco, the possibility of creating a trust exists only when the settlor's own national law allows trust creation. In most cases the trusts in Monaco are created under the laws of other countries. The only contact with Monaco is that the trust and its funds may be administered here.
Generally, any type of asset may be transferred to a trust: cash, securities, real estate, gold, art, businesses etc.
Advantages of Trusts
- inheritance tax does not apply;
- problems of probation and inheritance laws are avoided;
- the tax on investment income does not apply on property in the trust or in case of political/social instability in the country;
- the assets in the trust are protected legally against litigation, bankruptcy or seizure;
- there is the possibility of holding or managing an offshore corporation minimizing business/corporate taxes
- privacy regarding the nature of investments and to whom it provides benefits.