The Swiss Franc and the

Three Diversifications
Pierre-André Gonthier
 W hen we think of diversification, we generally
think of owning different classes of assets.
Such asset diversification might take the form of
owning different stocks, bonds, mutual funds and
real estate interests.

As important as investment diversification is, it is

only one of three critical diversifications. The oth-
er two are currency diversification and jurisdic-
tional diversification. Innovative Swiss annuities
enable wise investors to profit from all three levels
of diversification.

Let us take a look at how broadening one’s focus to

include currency and jurisdictional diversification
can mean the difference between a successful sav-
ings/investment plan and failure.

Currency Diversification

We generally think in terms of our own national

currency. When I go to the store, I am looking to
buy a franc’s worth of something. For others, it is
a dollar’s worth of this or a pound’s worth of that.
In some countries, notably the United States, it is
not possible to open accounts at the local bank in
any currency other than U.S. dollars.

Yet, the currency in which your savings and invest-

ments are denominated can make an enormous dif-
ference in your ultimate financial well being.

We all know what happened in 2008. The stock

markets around the world experienced steep de-
clines. In many countries, investors sustained loss-
es not seen since the Great Depression.

The currency in which you had your investments

made a difference in how you fared. Interesting-
ly, the most conservative investments sometimes
showed the most gain.

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The Swiss Franc and the
Three Diversifications
By Pierre-André Gonthier

Let us look at the Swiss franc. For this example,
we will assume that in January of 2008 you pur-
chased CHF 1,000 in bank notes How did your
fare compared to various world currencies?
By the end of December that year, here is what
happened. In comparison with other currencies,
your Swiss francs would have appreciated:
Australian dollar 29%
Many of our clients come from countries where
the legal system is very much what the people in
power want it to be: a tool to reward their friends
and punish their enemies. When the wind is
blowing from the right direction, the friends of the
powerful can prosper. When the wind changes,
when a new administration comes to power, new
laws, regulations and “interpretations” can swiftly
result in the confiscation of hard-won wealth.

British pound 47% Switzerland has a strong foundation of objective

Canadian dollar 33% laws interpreted by an independent judiciary. An
Euro 11%
indication of just how highly regarded the Swiss
28%
legal system is that, when Mustafa Kemal Atatürk
Russian ruble
founded the Turkish Republic, he adopted for his
Swedish krona 29%
country the Swiss civil code.
US dollar 4%

0 10 20 30 40 50 Our American clients seem particularly inter-

PERCENT
As we can see, the currency you choose for your
investments can make all the difference in the
world.
The fiasco of the 2008 investment-world collapse
is one reason why many investors the world over
are turning to the Swiss franc to achieve diversi-
fication in this highly profitable currency.
ested in the concept of jurisdictional diversifi-
cation. This is with good reason, as the United
States originates approximately 90 percent of the
world’s lawsuits.
Unlike in some countries, in Switzerland a law-
suit is considered the last alternative, rather than
the first, in dispute resolution. Unnecessary and
frivolous lawsuits are considered very bad form
here.

Let’s say that you have carefully diversified your

asset holdings and currencies. Whatever invest-
ments and savings you have can be at risk if they
are not owned in a secure legal jurisdiction.

Jurisdictional Diversification

Just as we think in terms of our own national cur-

rency, we also tend to see the world through our
own legal system. Yet not all legal systems give
us the same level of protection. Ultimately, your
assets are only as safe as the legal system that pro-
tects them.

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 One of the first things one learns about the Swiss
legal system is that Switzerland is a loser-pays ju-
risdiction. What this means is that the loser in a
lawsuit pays the prevailing party’s legal fees. If
a foreigner wants to initiate a lawsuit in Switzer-
land, the court will require him to post a bond suf-
ficient to pay the defendant’s legal fees should he
lose.
Just as a weak currency can make a good invest-
ment lose value, a weak legal system can leave
one with no assets at all.
Privacy and Confidentiality
Privacy and confidentiality are fundamental to
Swiss life. In Switzerland, we believe that your fi-
nancial affairs are your business and yours alone.
Our banking secrecy has been much in the press
these days. Despite what one may read, banking
secrecy is alive and well. What is not protected
-- and never has been -- are actions taken in anoth-
er country which are also crimes in Switzerland.
Thus tax fraud -- where false documents or the
3 where I know it will always be safe.»
like are used to evade taxes --is a crime in Swit-
zerland, and thus is not protected.
Less well known, but in some cases offering even
more protection, is Swiss insurance law. The pro-
tection offered by our insurance law, which can
even protect one in the event of bankruptcy, will
be discussed later when I cover the subject of
asset protection.
The Innovative Swiss Annuities
Switzerland and its currency offer the dual protec-
tion of jurisdictional and currency diversification.
Increasingly, investors the world over are looking
to Swiss annuities to manage a portion of their
wealth. Let us take a look at what is piquing their
interest.
Classic Annuities™ -- The Conservative
Accumulation and Life Income
Accounts
Swiss annuities are about as conservative an
investment as one can find. No Swiss insurer has
ever failed. Insurers in Switzerland are required
to have assets in excess of 100 percent of their
liabilities.
As conservative as they may be, however, we
know that during the financial crash of 2008, citi-
zens the world over achieved impressive gains
with their Swiss annuities.
Fortunately, it is perfectly legal for citizens of
almost every country -- which includes the seven
nations whose currencies were listed on page two
-- to own an annuity issued by a foreign insurer.
Many of our clients tell me some version of the
following: «I have saved and invested for many
years. As I grow older I want to take a portion
of my wealth off the financial carousel and put it
These are the people who come to see us for
either an immediate or deferred Classic Swiss
Annuity™.

An Income in Swiss Francs You Cannot

Outlive

The attractiveness of an immediate annuity is that

once the premium is paid, the life income in Swiss
francs begins at once. Most of our clients have
their Swiss--franc income payments wired to their
local bank, which converts the payment to their
national currency. Strategic Annuities™*
The life income can be paid on one life or jointly Strategic Annuities™ are innovative investment
on two. The annuity’s beneficiary options allow vehicles that allow individuals to determine the
any unused portion of the annuity to be paid out to investment make-up of their annuity.
the person or person of the owner’s choice upon
his or her death. However, come what may, you These annuities are issued by Swiss-insurance-
receive your income in Swiss francs for as long as company subsidiary insurers in Liechtenstein,
you live. Ireland, Luxemburg and Singapore.

Swiss Franc Accumulation Accounts
Classic Deferred Annuities™ make excellent cap-
ital accumulation accounts.
Over the past decade, Swiss-franc deferred annui-
ties earned interest in excess of four percent per
annum. This is far in excess of the usual one-half
percent interest paid by Swiss banks.
Classic Deferred Annuities™ operate very
simply. You deposit funds with your Swiss insur-
ance company. The funds earn interest. You
may withdraw all or a portion of your funds any
time you wish. You may also change the currency
your account is denominated in to another major
currency, should you wish.
At any time you have the option of converting
your Classic Deferred Annuity™ into a Classic
Immediate Annuity™ and beginning to draw a
lifelong income.
The insurer provides an annuity structure -- with
all the benefits of our insurance law -- to wrap
around the investments you choose to place inside
the annuity. In this way you are able to create a
personal holding structure, which in many
national jurisdictions is highly tax-favored.
The end result is a sophisticated asset manage-
ment structure which is protected by insurance-
law. For example, Liechtenstein insurance law is
a near mirror of the Swiss’.
* Specific rules apply to those subject to the
jurisdiction of the American tax system. Please see
our website at gonthiergroup.ch for complete details
regarding the rules and regulations thus
applicable.
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 In some jurisdictions, life insurance has special
tax benefits not accorded to annuities. If this is
the case, then a life insurance death capital may
be added, creating a Strategic Life Insurance™
policy.
A Low-Profile Structure
Swiss annuities are a low-profile structure.
A Swiss bank account is a high-profile investment
structure. Fiscal authorities the world over are on
the lookout for foreign bank accounts. In many
countries, with few exceptions, the tax authorities
will automatically equate a foreign bank account
with tax evasion.
On the other hand, an annuity is seen as harmless:
the widows’ and orphans’ friend. They are seen as
a low-profile pension arrangement, something to
tide one over during old age.
Asset Protection and Swiss
Insurance Law
Under our legal system, Swiss annuities and life
insurance contracts are afforded special protec-
tion not otherwise available to bank accounts or
any other investment structure.
Let us look at two situations that can arise when
one’s assets and wealth are under legal attack.
Protection From Judgments
Our insurance law protects you from judgments.
For this protection to cover your policy, you need
to have named your spouse or a lineal descendent,
e.g. child or grandchild, as the beneficiary. If you
have done this, then your policy cannot be seized
by creditors.
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There are two exceptions to this rule. The first in-
volves the situation where you have pledged your
policy as collateral for a loan. In this case, your
creditor can seize the policy if you default on the
loan. The second exception involves fraudulent
conveyance.
The concept of fraudulent conveyance means that
you transferred assets as part of a deliberate plan
to defraud your creditors. During the first year
of the policy, your creditors would need to prove
your fraudulent intent. From the fourth through
fifth year after establishing your policy (or chang-
ing the beneficiary), your creditors would need to
also prove that your primary beneficiary shared
the same fraudulent intent that you had. This is a
very hard standard to prove.
If you are adjudged bankrupt -- and this bankrupt-
cy judgment is accepted by a Swiss court -- then all
of the rights you have under your policy devolve
to your primary beneficiary. Thus, your policy is
no longer under your control and your creditors
will be unable to seize it. Once you emerge from
bankruptcy, your rights under the policy are fully
restored.
The World of
GONTHIER GROUP SA
The world we work to create for our clients is one
where their assets are safe and secure. Come what
may, our clients have a portion of their wealth di-
versified into the world’s most secure currency,
protected by Swiss insurance law.

Our clients hail from many countries around the

world. Their level of sophistication varies. What
they all have in common is a search for financial
certainty in an uncertain world. They look to place
a portion of their wealth in Switzerland, beyond
prying eyes of bureaucrats and attorneys.

This is our invitation to you, to join

the world of GONTHIER GROUP SA
clients and advisors.

We are a firm of international annuity and insur-

ance brokers. We welcome the opportunity to
work with you in the development of the invest-
ment structure which best suits your needs. While
we are not investment advisors, however, should
you wish, we can introduce you to investment
professionals. As with everything we do, you the
investor make all decisions regarding your assets
and how they are managed.

We also welcome you to visit us at our website

and, of course, at our offices in Montreux. Our
contact information is:

Avenue du Casino 13, Case Postale 1245

CH-1820 Montreux, Switzerland
www.gonthiergroup.ch
info@gonthiergroup.ch
Tel +41 21 962 8500
Fax +41 21 962 8501
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 NOTES PAGE

GONTHIER GROUP SA
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 Zurich

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GONTHIER GROUP SA
Avenue du Casino 13
Case Postale 1245
CH-1820 Montreux
Switzerland

www.gonthiergroup.ch
info@gonthiergroup.ch

Tél +41 21 962 8500

Fax +41 21 962 8501
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