Richard Tribe, Head of Equiom Private Office, discusses the evolving needs of ultra high net worth individuals and the growing requirement for a more global service.
As an international professional services provider, Equiom has been serving multi-generational families for decades and we have seen some dramatic changes to client behaviours over the years. Most notably there has been a shift in attitudes of the very wealthy, from a focus on wealth protection for future generations to more immediate, material desires – a luxurious lifestyle involving expensive cars, multiple properties, private jets or yachts. This development is particularly true for previously under developed and unstable countries.
The wealthy of these nations were traditionally humble people who wanted the best for their offspring, with many sending their children to be educated in the UK and US where they often settled. This resulted in a dispersion of wealthy families located across the globe and created the need for family offices with a true multi-jurisdictional reach.
The ultra high net worth (UHNW) populations have shifted geographically over the years and today’s global picture is quite different. According to Knight Frank’s 2019 Global Wealth Report, the UK and the US are still home to many of the world’s wealthy. Europe has the highest number of ultra high net worth individuals with the United States second, followed closely by Asia. However, the highest rate of growth in the UHNW population is predicted in Latin America, Asia and the Middle East. The five-year growth forecast for UHNWIs in these regions is more than 30%, compared to the historically more prominent regions such as North America and the majority of Europe, where predicted growth in this population remains under 25%.
More and more countries have adopted the materialistic way of life. This is becoming apparent with a richer population in previously less developed countries, such as China and India which are among the fastest growing populations for wealthy individuals.
Investment behaviours have changed too. The traditional model of investing in a conservative stock portfolio is rarely seen as the norm these days. Developments in technology over the years have opened doors to more sophisticated cross-border investment opportunities, and it is not uncommon to find UHNWIs holding a diverse range of assets, comprising, for example, real estate (both long-term investment and development projects globally), interests in start-up or well-established trading entities, artwork and antiquities, and cryptocurrency.
In respect of offshore structures, the ever-changing tax laws internationally mean that traditional service providers need to be flexible and incorporate the very best tax and legal advice to ensure the solution not only meets the needs of the client, but is also fit for purpose. For trusts nowadays there are more limited tax advantages. However, the fundamental purposes of asset protection, succession planning and confidentiality are still extremely important and are now seen as the main driver for such wealth planning. In markets such as the Middle East and Asia we have seen much greater interest in private trust companies (PTCs) over the last 12-18 months, as clients can retain a certain amount of control over their assets while still achieving the aforementioned objectives.
As the world gets smaller, commercial experience and technical knowledge in local jurisdictions is essential. With offices around the world, Equiom has access to a team of specialists across Europe, the US, Middle East and Asia and our premium service, Equiom Private Office aims to help individuals and families by adapting to market needs to ultimately achieve that ‘trusted advisor’ status.