Govt policies deter HNW foreign investors from Australia

investment/migration/

image
image
expand image

Australia’s Investor Visa is losing its appeal due to the high-risk profile of investments caused by policy changes, meaning private banks in Australia are having to work harder to compete in countries with more favourable immigration conditions, according to consulting firm, GlobalData.

Where investments of at least $5 million into complying investments such as mutual funds, equities, and bonds for a minimum period of four years was required previously, Investor Visa applicants now had to invest $1.5 million in Australian Securities Exchange (ASX)-listed funds, and a further $500,000 of the total in eligible Australian venture capital (VC) or growth private equity funds.

GlobalData senior wealth management analyst, Heike van den Hövel said most of the 11,850 high net wealth (HNW) investors in Australia stemmed from the UK or Asia-Pacific regions, with Chinese investors leading the more recent migration flow. Van den Hövel has called for market-targeted programs for Chinese investors designed to maximise “lucrative” opportunities for the Australian economy, and touted current Government policy around the visa as inflexible.

“The government is unlikely to relax visa conditions, so the onus is on banks to counteract the trend of falling HNW migrant numbers,” she said.

“To achieve this, they should focus on lower-risk investments within a high-risk asset class.

“HNW migrants from Asia-Pacific have a much lower appetite for risk than Australian HNW investors. For example, investors in the latter country allocate the bulk of their wealth to equities, while deposits and property dominate in China.”

van den Hövel said a sustained engagement and education campaign would be needed to continue to attract HNW migrants to the visa program, and said a lack of understanding was a key deterrent for better policy support of non-conventional investments.

“Private banks just have to understand the unique investment and risk preferences of this segment and adjust their targeting strategy accordingly,” she said.

“HNW expat flow may have reduced, but the opportunity is still there.”

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

So we are now underwriting criminal scams?...

2 months ago

Glad to see the back of you Steve. You made financial more expensive, not more affordable as you claim, and presided ...

2 months ago

Completely agree Peter. The definition of 'significant change is circumstances relevant to the scope of the advice' is s...

4 months ago

A Sydney financial adviser has been permanently banned from providing any financial services, with the regulator deriding his “lack of integrity, trustworthiness and prof...

3 weeks ago

Minister for Financial Services, Stephen Jones, has provided further information about the second tranche of the Delivering Better Financial Outcomes (DBFO) reforms....

1 week 6 days ago

One licensee has lost 27 advisers in the past week, now sitting at zero, according to the latest Wealth Data figures....

3 weeks ago

TOP PERFORMING FUNDS