Wealthy emerge from crisis divided on future prospects

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A new wealth-consciousness is emerging as wealthy investors seek greater knowledge and information about investment

  • Report reveals significant divergence of opinion on wealth creation opportunities in next five years
  • Equities and property hold favour with wealthy investors in uncertain times
  • Newly engaged investors call for information and simplicity in wealth management

Over a third of UK wealthy do not trust the next g ...17 of 22 UK Landscape of Wealth | Wealth Insights | Barclay ... 15 of 22

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Barclays Wealth, a leading global wealth manager, has today (24th May 2010) published a new report revealing wealthy investors' attitudes towards the global economic outlook and prospects for investments in the years ahead.

Entitled 'The Changing Wealth of Nations', the report is the eleventh in the Barclays Wealth Insights series. Surveying more than 2,000 high net worth individuals across different markets around the world, it highlights a polarisation of opinion on the global economic outlook and a perceived lack of clarity over the potential for investment growth.  Against this backdrop a new "wealth-consciousness" is emerging as wealthy investors seek greater knowledge and information about investment and a straightforward approach to wealth management.

Optimism versus pessimism

The report shows a significant divergence of opinion over wealth creation opportunities in the next five years with some regions being significantly more optimistic than others.  Respondents in the GCC are particularly confident of a global recovery, with 1 in 3 (33%) expecting the economy to grow over the next few years. By contrast, in Europe, less than 1 in 5 (19%) expect global growth in the years ahead while the USA takes a more pessimistic view with just 13% forecasting growth in the global economy in the short to medium term.

Top 5 optimists*

Top 5 pessimists**

 

Spain

40%

Monaco

52%

Qatar

34%

Japan

35%

Saudi Arabia

32%

USA

25%

Ireland

26%

Switzerland

17%

India

26%

UK

16%

* % think the global economy will grow over the next five years

 

** % think the global economy will deteriorate over the next five years

 

David Semaya, Head of UK and Ireland Private Bank at Barclays Wealth commented: "There is a great divergence of opinion on what the next decade will bring for the global economy. The global outlook of wealthy individuals is heavily tainted by experiences in their local markets. While there are grounds for optimism in some local economies, in the UK the outlook among wealthy investors is cautiously pessimistic. Uncertainty over the UK's budget deficit, and an indeterminate political outlook have left some investors feeling wary."

Opinions split over investment choices

After the downturn, there is widespread caution among investors with 51% of high net worth individuals saying they are avoiding perceived high risk investments more than before the economic crisis.  The wealthy report an enduring attachment to equities and property, relative to other asset classes.

When asked about the outlook for investment over the coming year, some 47% of respondents say they think equities will perform well. Property is the most favoured asset class among wealthy investors globally, and in the UK, with 50% saying that property will perform well over the next year.

There is far less interest in other forms of investment with only a third saying they expect hedge funds or alternative investments such as wine or art to do well in the next year. Government bonds are the least popular with only 21% saying they will offer positive returns in the next twelve months.

However, recent experience in some economies has inspired acute caution among their wealthy inhabitants. For example in Spain, where the public debt has risen steeply over the last twelve months and local economic recovery is expected to be slow, wealthy individuals are significantly more gloomy in outlook with only 19% expecting equities to perform well and just 9% anticipating positive returns on property over the coming year. Respondents in Japan, which has experienced several decades of falling property prices, are also less keen on property with just 16% favouring property over the one year horizon.

David Semaya comments: "Uncertainty around the prospects and timing of the global economic recovery is a major factor behind investors choosing the familiar asset classes of equities and property. Wealthy investors in the UK share the global view in attaching trust to 'traditional' forms of investments. The current economic and political climate in the UK is casting a cloud of doubt over many aspects of business and investment life, and in times of uncertainty the familiar often seems 'safe'. However, Barclays Wealth has continuously urged investors to ensure they do not concentrate their portfolio too narrowly in any market environment."

 The conscientious wealthy

There is immense polarisation of opinion among wealthy investors across the globe on the prospects for global economic recovery and the potential for wealth creation over the coming years.  However, the report shows that the downturn has brought about a newly engaged investor keen to increase their own knowledge about investment and to call for greater simplicity and transparency in financial affairs.

The downturn has prompted a thirst for knowledge among wealthy investors, with almost a third (30%) saying they are reading the financial press more than before and over a quarter (26%) spending more time talking to family and friends about investment or consulting their financial adviser more frequently than in the past (27%).

Wealthy investors are demonstrating increasing self-reliance in managing their portfolios with almost half (43%) reporting that they are reviewing their investment portfolios more now than before the downturn.  The report highlights a widespread engagement among the wealthy in closely managing their financial affairs, with a quarter (25%) spending between two and five hours per week actively investing their money, 16% spending five to twenty hours and 10% spending over twenty hours per week.

David Semaya adds: "Recent past experience with market dislocation has prompted a new "wealth consciousness" amongst high net worth individuals around the world.  As we start the new decade, investors are paying closer attention to how their assets are being managed and are taking a more hands-on role in the process of investment itself.  The wealthy are knowledgeable about how they invest, as "engaged investors", they want to question the rationale and risks that lie behind investment approaches.  The notion of the wealthy as passive investors, keen to delegate the task the others, seems increasingly out of date."

"The decade ahead will see the emergence of a generation of high net worth individuals who are increasingly engaged with managing their financial affairs. The wealth management industry must respond with an advice-led, straightforward and transparent proposition that appeals to an investor."

Cohn & Wolfe

James Pieslak
Tel.:+44 (0) 7331 5309
Cell: 07736 325 985

Jo Swift
Tel.:+44 (0) 7331 5476
Cell: 07811 200716

Barclays Wealth, Corporate Communications

Lucy Davidson
+44 (0) 20 7114 8947

Will Bowen
+44 (0) 20 7114 8434

Read the full report: