American RCBI Investors: A Huge Market Waiting to be Explored
Many Americans never thought of leaving the US. But 2020 has changed all that, and it’s a topic that is on the minds of a growing number of people, writes Rogelio Caceres of RCG Global.
Since the end of World War II, the global ultra and high-net-worth (U/HNW) community has viewed the United States as one of the most dynamic business environments in the world. Whether as an ideal launching pad to commence a rewarding professional career, realise entrepreneurial ambitions or to pursue university and postgraduate studies at many of the best educational institutions in the world, the US has long been perceived as the ideal location. It is not surprising, therefore, that residency and citizenship by investment (RCBI), colloquially known as “Plan B” investments, have largely been perceived by American HNW investors as assets needed by European jetsetters, Middle Eastern oil magnates or soon-to-be-deposed Latin American and African dictators. Based on the US market’s lack of perceived need, the global RCBI industry understandably focused on serving much more fertile markets in Asia, the Middle East, Africa and Russia, while the United States, the world’s largest and most dynamic HNW investor segment, remained largely “out of sight, out of mind.”
As a result of the United States government’s calamitous response to the Covid-19 pandemic, however, elite American households began to become increasingly concerned about the short- and long-term outlooks facing their US-based families. At my firm, RCG Global, we asked ourselves a simple question: Why should American citizens ensconced in their homes in Miami, New York City, San Francisco, and Chicago, to name just four of the Top 10 wealthiest cities in the world, not benefit from the same level of unfettered access, freedom, stability and security enjoyed by their international peers in Shanghai, Mumbai, Moscow, and Lagos?
Doubling in Size
Based on our proven track record promoting the US EB-5 programme, the world’s largest RCBI programme in highly promising (yet overlooked) EB-5 markets such as India, Brazil and South Africa, RCG Global firmly believes that the American HNW market is poised to rapidly adopt RCBI solutions. It possesses several of the most important demand drivers, which, from a market attractiveness perspective, are critical to the successful adoption of new investment migration solutions. No other country on the planet has the sheer number of millionaire households than the United States. If American HNW families begin to adopt RCBI solutions at a rate anywhere similar to their peers in China, India and the Middle East, the entire $25 billion RCBI industry could easily double in size within 10 years’ time. According to a Wealth-X/Economist 2015 study, American households overwhelmingly cite “Quality of Life” as their number one driver to pursue a second passport or alternative residencies.
Given the spectre of continued social unrest, the ravaging effects of climate change (particularly in California and New York City), combined with the probability of new tax regimes taken place under a new Biden Administration, the US HNW market exhibits all of the key demand drivers to propel a rapid growth curve going forward. The global pandemic of 2020 fundamentally weakened investor confidence, both at home and abroad, in the United States’ capability to effectively manage future global disruptions and crises. As the situation worsened over the summer, I personally began to explore potential RCBI solutions for my own family. When speaking to friends and colleagues here in Miami, or in New York and the Bay Area, for example, I was intrigued by how many of my peers were open to pursuing well-structured RCBI solutions as an effective hedge, an insurance policy of sorts, to sustained political and economic instability. Their primary reasons varied from a desire to preserve their enhanced standard of living, to ensure uninterrupted access to the best healthcare providers, to eliminating the personal and professional drawbacks caused by extremely limited global mobility resulting from the US passport’s lack of visa-free travel privileges.
Drop in Passport Power
At the top of my list of “things I never thought would ever happen…” I would likely have placed witnessing the rapidly escalating deterioration in the power of the once all-mighty blue American passport. For as long as I can remember and as recently as 2015, the US passport was ranked as the #1 passport in the world. However, a never before seen drop in the passport’s global standing this year and the sudden and unexpected lack of international mobility in terms of visa-free international business and leisure travel has encouraged many to look for alternative solutions. For example, at the beginning of 2020, an American passport holder could travel to 185 countries without the need to secure a visa in advance. As of September 2020, this number shrunk to fewer than 75 countries, a global ranking placing the US slightly behind Botswana (no offense to my Tswana-speaking friends.) When future pandemics and other global disruptions strike, those with the foresight to invest in RCBI assets will be best placed to weather the storm.
Author: Rogelio Caceres, Founder and CEO of RCG Global