The concept of investment immigration may be new for many MFDs. Can you explain what is investment immigration and how does it work?
Traditionally, Indians have been settling overseas across the globe based on their education, job or through family sponsorship. For those who do not fit into any of the three categories, the only route to migrate overseas is through Investment Immigration. As the term indicates, it’s seeking residency and citizenship in a country by investing in either a real estate or a business or through any designated investment mode offered by that country. Every country has its own objective for offering this route to permanent residency (PR)/Citizenship - job creation, economic development or capital inflows. Similarly, each investor has his own objectives - children’s education and settlement, better quality of life, better business/job prospects, retirement or simply having a Plan B for life.
This concept has been in existence since the 1980s when Canada started seeking immigrants. The US followed suit in 1990 and today there are more than 90+ countries offering migration through investment. Out of these, the frontline countries are 25 of which the top 10 are the most sought after. To name a few of the top preferences, they are the USA, Canada, the UK, Ireland, Portugal, Australia and New-Zealand. Investment immigration has gained traction in the last decade globally and in India has become popular in the last 2 – 3 years.
How does investment migration benefit clients?
Individuals and families who aspire to migrate have an option to do this without having to worry about education, skills or job. Be it a better lifestyle, better business opportunities or giving children a better future, investment migration gives people a wide choice of countries and global mobility with an ease.
Who are the ideal clients for investment immigration?
It appeals to all segments of HNIs - professionals, businessmen and NRIs of any age. The ideal client is an HNI with an aspiration to move to a new country. In India, the demand has been more for countries offering residency like the US, Canada and the UK, however, the demand for citizenship programs for European and Caribbean countries is steadily rising. The primary reason behind this is parents wanting their children to not only study but have an option to settle overseas, so as to give them a platform for a better future. In some way, it is the new age inheritance.
What are the basic features of this solution offering that MFDs must know?
The basics features of investment immigration are:
- Most countries offer PR to the entire family which includes applicant, spouse and children. There are certain age restrictions on children from country to country. Some countries even offer to include the applicant’s parents and grandparents in one application
- The time needed to get a PR or Citizenship varies from 3 months to in some cases even 8 years depending on the country. This time is crucial- if one plans well, this solution can be used to benefit the client and his family
- Investment amounts range from USD 350,000 (Rs.2.54 crore as on March 04, 2021 exchange rate) to as high as a USD 2 million (Rs.14.56 crore). More the sought-after country, higher is the investment amount. However, from time to time there are innovative solutions available, which lower the investment amounts and time frames for getting a PR
- All programs offered are government approved and are offered by the Immigration Department of the host country
- Investment Immigration is a journey, from understanding the client’s need to advising him on what is the best solution, to executing documentation which involves liasioning international law firms and experts. There is a pre-application journey and then a post-application one, we ensure that irrespective of the time frame we hand hold the client in entirety
- Once applied, this opens up many other services for the client – from asset planning, to tax structuring, creation of trust and will. These solutions are also available for MFDs
- This is a need-based product that is mostly bought and cannot be sold. The investor will do this irrespective of whether his MFD offers it or not as it is his need that determines it
- Net worth, liquidity and investment are the other critical aspects, which determine eligibility of investors for any program
What role can MFDs play in offering investment immigration to clients?
Most of the client referrals are coming either from CAs, lawyers or directly. MFDs are a trusted confidant of their client, most clients share their aspirations, challenges and life goals with them. MFDs thus can identify the needs of their client and offer this solution through experts like us. Today anyone who has done or willing to do investment immigration is someone’s client on wealth. However, since most MFDs do not have an understanding of this subject, they have not offered it to their clients. MFDs can tie-up with players providing these services to diversify their offerings.
What is the scope and the expected stream of revenue generation?
Global Wealth Migration Review says that India has witnessed the third highest outflow of wealthy individuals last year and nearly 5000 millionaires or 2% of the total number of high-net-worth individuals in India left the country in 2020. Professionals -CEOs/CXOs know that their children are not going to inherit their positions so why not look beyond overseas education and provide them a better platform to excel. Certain NRIs either won’t get or don’t want to seek permanency in their country of residence (especially Africa/Middle East), many of them don’t want to come back to India.
The revenue attached to it is very attractive for the MFD which varies from country to country. Now, with most other investment products being on trail revenue model, this service adds high transactional income. More importantly, if it’s a MFD’s client who does this without the MFD being involved, it’s a revenue leakage and a missed opportunity to value add. If the MFD is a part of this process, then his relationship gets cemented lifelong once the client becomes an overseas citizen.
Why should MFDs look at offering investment immigration to their clients?
Not all MFD clients are immigration clients but all immigration clients are some or the other MFD/ advisor’s client. It is a solution the client seeks and not something that can be sold. Hence, this will be the biggest value add to their clients as they are better equipped to evaluate the need. Anything related to investments should always be a part of the MFD’s bouquet of services. Once done, this is also an excellent cross selling opportunity for other products like trust, wills, tax planning etc.
What are the key risks involved in investment migration?
The risks vary depending on the country, program and project. There are few options which are risk free, but in most other options, it’s the risk mitigation to focus on. The investment is capital at risk as countries do not want debt structuring for investment immigration. This is where expertise comes into play. Our experienced team, globally strong strategic partners ensure that we are able to offer solutions, which evaluate risk and offer solutions accordingly. One of the most critical aspects in risk mitigation is firstly to ensure that the right country is offered for migration, as it should be most suitable for the client’s stated objective. There is also a softer aspect of the client and his family making up their mind to move to a new world, wherein we assist in preparing them for all possible eventualities. These programs are normally well defined by governments so if one ticks all the boxes then the risk to process can be mitigated well.
