Is the wealth management sector experiencing a revolution or an evolution? This was the theme tackled by 10 experts during the Paperjam Club’s recent event on the future of wealth management, which highlighted the transformation that the sector is undergoing. For finance minister (CSV), who delivered a keynote speech at the event on 25 March, “there are times when the world turns faster than usual, and we are clearly living in such fast-paced times of change.” Wealth management in Luxembourg has six key dimensions, he said, presenting what the country has done in each of those dimensions and how the grand duchy plans to move forward.
The high committee for the financial centre, Roth noted, “is looking closely at ways to further boost our growth potential by improving our legal toolbox, making business carried out of Luxembourg more attractive,” modernising the legal framework, facilitating succession plans, making Luxembourg investment vehicles more attractive, and exploring how AI can improve efficiency and enhance competitiveness.
Investment management
Luxembourg is Europe’s largest investment fund centre and the world’s top cross-border distribution platform. “Our fund toolbox supports everything, from liquid equity strategies to private equity, real estate and infrastructure mandates,” said the finance minister. The grand duchy has developed “flexible fund vehicles” like reserved alternative investment funds (Raifs), European long-term investment funds (Eltifs) and specialised investment funds (Sifs), “allowing for efficient structuring of both retail and institutional products.”
Next on the agenda is to “further enhance the toolbox for tokenised assets,” as well as “explore fund structures tailored to next generation investors.”
Retirement planning
Luxembourg--and Europe more broadly--is ageing, making retirement planning more important than ever. “Luxembourg supports pan-European solutions and group pension plans with strong governance and portability. What we have done [is] launch a pan-European pension product, a first step toward pension mobility in the EU, and strengthen our pension platform offerings, including for multinational corporates and mobile professions.”
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“What’s next?” asked Roth. “We are assessing incentives for green retirement products,” whilst policy measures at the EU and national levels are planned to support further uptake of supplementary pension schemes and auto-enrolment in pension plans.
Tax planning
“Sound tax planning supports intergenerational wealth transfers and optimises returns within a compliant framework. Luxembourg offers clarity, legal certainty and full adherence to international standards,” the finance minister argued, noting that the country had “fully implemented” the , the Anti-Tax Avoidance Directive (Atad) and the Dac6 directive, which aims for transparent and fair taxation.
In the pipeline are plans to modernise guidance on digital asset taxation and new wealth structures, said Roth, as well as strengthening tax treaties to avoid double taxation and support mobile wealth.
Estate planning
Luxembourg has a “thriving ecosystem” of banks, insurance firms and legal experts who can offer the relevant expertise when it comes to estate planning. In the future, Roth continued, “we will modernise estate planning tools to better reflect the reality of global families and digital asset inheritance, and we are also looking at ways to make wealth transition more efficient for family-owned businesses.”
Risk management
Risk management is a key element of preserving and managing wealth, said the finance minister, “whether through insurance diversification or macro hedging strategies.” The grand duchy is a “hub for international life insurance contracts, structured solutions and also wealth protection products.” It has a “regulatory framework that allows for unit-linked life insurance policies tailored to high-net-worth clients” and .
So what’s next? “Discussions are ongoing to further modernise [the] unit-linked regulatory framework to take into account the newest developments in asset management.”
Philanthropy
Philanthropy and purpose have become more important in wealth management. The Fondation de Luxembourg, which , is an organisation that helps individuals and companies carry out philanthropic projects, “enabling donors to structure giving with transparency and efficiency.” The grand duchy in January 2024 also launched a . Looking ahead, concluded Roth, “we are looking into supporting more impact finance initiatives.”