Luxembourg has a long tradition of wealth management and is today the leading wealth management centre in the Eurozone. In line with the financial centre as a whole, local private banks and family offices specialise in handling international clients who often have complex business and family profiles stretching across several countries or even continents.
A large number of synergies exist between the wealth management activities and the investment fund business – securities custody, order routing for transactions, reporting, distribution of funds, etc.
Generally speaking, activities can be split into three large categories: bank transactions, investment advice and wealth planning.
In the area of wealth planning, Luxembourg offers two types of holding structures that are tailor-made and facilitate asset protection and long-term inheritance planning:
- The société de participations financières (SOPARFI) is designed to optimise the management of a group of companies and can take advantage of Luxembourg’s double taxation treaties.
- The second vehicle is the Family Wealth Management Company (Société de gestion de patrimoine familial, SPF). This is an investment company that facilitates the administration and management of wealth on behalf of individuals (who do not need to be related to each other).
For wealthier customers, many banking institutions offer a global wealth structuring service which encompasses all the client’s assets (such as investments, life assurance and real estate) and includes optimised tax and heritage planning.
Luxembourg law lays down very strict rules regarding customer privacy. These laws apply to all employees of credit institutions and forbid the transmission of any information relating to a customer account, except in certain cases expressly defined by the law.
Portfolio management is an important element in the spectrum of services available in Luxembourg.
Experienced account officers assist customers with portfolio structuring and investment decisions. Discretionary portfolio management is offered at moderate fees generally linked to the value of the assets managed. Portfolios are kept under continuous review on the basis of research by investment specialists, who can often draw on research conducted at group level. Services include sophisticated technical support, custody, record-keeping and, if required, nominee functions.
Risk Management is part of the advanced portfolio management strategies to help clients, from individual investors to large financial institutions, to assess the uncertainty of the future in order to make the best possible decision. A continuous risk management approach is applied to effectively anticipate and mitigate the risks that have critical impact on the project.