Supporting Global Clients in Times of Market Turmoil

Even for investors taking a long-term view, recent market gyrations have been unsettling. It is hard to keep a cool head when witnessing price drops and volatility across asset classes, with even traditional safe havens not looking as safe as they once did.

In the immediate wake of President Trump’s imposition of tariffs on a global scale, US stock markets suffered losses not seen since the pandemic¹ and experienced a rollercoaster ride unlike any since the 2008-2009 global financial crisis². The VIX – a volatility index known as Wall Street’s “fear gauge” – hit a level only witnessed twice before³. Hong Kong’s stock market had its biggest daily decline since the 1997 Asian financial crisis⁴. Yields on UK 30-year gilts hit the highest level since 1998⁵. Oil prices fell to their lowest since February 2021⁶.

Investors usually flock to US Treasuries and the US dollar in such crises – but not this time. Uncertainty about the stability of policy has weakened demand for US-backed assets, with yields on Treasuries soaring⁷ and the dollar plunging⁸.

President Trump’s subsequent volte face regarding “reciprocal” tariffs brought a rebound in stock markets, but it also emphasized that no one knows which direction the administration will turn next.

And, as the reprieve did not include China, which has retaliated with its own tariffs and initiated a trade war between the world’s two largest economies, markets soon headed south again.

The result is that, as well as experiencing huge levels of uncertainty, both investors and consumers expect rising inflation and stagnant growth (stagflation). That creates a difficult situation for the Federal Reserve, which is unable to cut rates to stimulate the economy for fear of increasing inflation.

Investors Seeking Safe Havens and Stability

Concern for the US economy and the unsettling unpredictability of policy have led many UHNW investors – already mobile and globally diversified – to start shifting wealth out of the US. Private bankers, multi-family offices, and asset-management groups in Switzerland⁹ and the UK¹⁰ are reporting increased enquiries from US citizens, living in the US or abroad, and US residents about transferring assets.

However, neither of these options is straightforward. Americans cannot open a Swiss bank account due to regulations such as Fatca, which requires foreign banks to report US account holders to the IRS. But if a Swiss wealth or asset manager is registered with the SEC in the US, it can help clients open accounts and manage the money.  

In the UK, changes to the “non-dom” system, which offered lower taxes to people not UK domiciled, mean that new residents’ foreign income and gains are only free of UK tax for the first four years (provided they have been non-resident for the previous 10 years). After that, they must pay tax on worldwide income and gains. So, while it might be easy to shift wealth to the UK, it may be just a stop-gap measure. What is more, US citizens are still required to pay US tax on worldwide income, regardless of where they are resident.

Managing Complexity With a Trusted Independent Partner

To successfully transfer assets – and to continue to protect and grow wealth – in this ever-changing and complex climate, it is necessary to have an independent wealth manager with both global reach and local knowledge.

Global wealthy individuals, families, and foundations require a wealth manager large enough to offer a view of the bigger picture, yet with the independence to access specific expertise and bespoke solutions around the world. At the same time, they want a manager that is able to offer institutional-grade investment opportunities that can provide strong returns and risk diversification.

The global lives and global portfolios of UHNW individuals also necessitate a wealth manager that understands and can manage their increasingly broad and complex needs. For geographically dispersed international families, local knowledge of numerous markets around the world is a key motivation when choosing a partner to help protect and grow their assets.

The ideal is a wealth manager that can provide the focused attention of a bespoke family office and localized solutions tailored precisely to UHNW people’s needs, while being a part of a truly connected international ecosystem. Clients do not want to have to deal with many different firms for different specialisms; they prefer their advisors to be able to do more for them, to be a “general practitioner”.

With this kind of relationship, a wealth manager can provide a trusted personal touch that is even more fundamental in such times of turmoil. 

Staying Open to New Opportunities

Global reach and local expertise are also essential when seeking out the possibilities for growth that always exist in times of change and dislocation. While the immediate concern is protecting wealth, fear should not hold back investors from taking advantage of new opportunities that may arise.

In the short term, service industries, which may remain relatively unaffected by the imposition of US tariffs, could offer a safe haven. In the medium term, some businesses and countries that may end up with lower relative tariffs could see exports to the US grow as the costs of their products become comparatively lower for American consumers.

Keeping in mind that nothing is set in stone with Trump’s trade policy, the tariff genie is truly out of the bottle now, meaning it is possible that trade flows will reorient away from the US in the longer term. And while the global supply chain is complex and transformation takes time, the pandemic demonstrated how a crisis can incite faster-than-usual change.

A reduced role for the US in global trading – and an intensifying US-China trade war – could enable other countries to take a larger role in some industries, such as Europe in the development of AI. And if China loses the US as the main destination for its exports, it will look for other markets, potentially opening up new trade routes, and lowering costs for consumers (and therefore inflation) in places such as the UK and Europe. That could create new, exciting investment opportunities, which may require a firm with expert local knowledge to identify.

Navigating Uncertainty

Cutting through all the recent vacillations in President Trump’s policies, the current state of affairs is that America’s overall average tariff rate is now the highest it has been in nearly a century – jumping from roughly 3% to about 20%¹¹. So, no matter what the US administration decides to do next, the global trading landscape has irrefutably and decisively changed.

In this climate of uncertainty, it has never been more important to work closely with a trusted wealth manager that is able to see the bigger picture and offer bespoke solutions with simplicity and clarity. Together with our UHNW clients, we at AlTi are working hard to mitigate the risks, protect wealth, and provide stability – while always keeping an eye for emerging opportunities.