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Conservation Plans – Why Preserving Wealth Is A Priority For Today’s HNWIs

What do High Net Worth Individuals require and, indeed, expect from their wealth managers?  It’s an important question that you might have asked yourself – albeit from a slightly different perspective – when choosing a wealth management firm or assessing the performance of an existing provider.  Equally, it’s a question that wealth managers should be asking of themselves in order to provide a service that is responsive to the needs and circumstances of their clients at a time when conserving wealth seems to be ever more important.  

But the answer is not necessarily straightforward.  Every High Net Worth Individual is different in terms of circumstances and life goals.  There is no one-size-fits-all to the provision of services in a market where a client might be a twenty-something entrepreneur who has just sold a business or a seventy-year-old man or woman seeking to maintain a comfortable lifestyle while passing on wealth as tax-efficiently as possible to the next generation.  And of course, there are many demographic points in between. 

But it remains an important question to ask – at least in terms of determining broad trends that will help shape wealth management services.  And happily, there is usually no shortage of reports that seek to capture the zeitgeist in terms of the requirements of HNWIs.   

Among the latest is a new report – The Shifting Landscape of Global Wealth – published this year by the Economist Intelligence Unit (EIU) and commissioned by RBC Wealth Management.  

A Product of the Times

You could argue that the report is very much a product of our somewhat uncertain times. Drawing on the thoughts of more than 1,000 people around the world – representing a complete gamut of ages and genders – the study reflects attitudes that are shaped not only by concerns over issues such as tariffs and Brexit but also the arrival of a new globally-minded generation of investors.   

While there are certainly differences between the different age groups – young investors are particularly keen on international opportunities, for example – the report highlights at least one theme that seems to apply right across the lines of demographic demarcation: namely that protecting – or as the report puts it, future-proofing –  wealth has become a priority issue.  

To be more precise, 55 percent of respondents cited conserving wealth as their number one goal.  And for many, wealth conservation was not only a target but also a challenge. 51 per cent said holding onto their wealth was becoming more difficult. 

The Cost of Living 

This feeling was common across the generations.  Perhaps surprisingly, while just about everyone was worried about the state of the global economy and the effect that a downturn might have on personal wealth, young people expressed particular concern.  The other factor affecting all age groups was a fear that the rising cost of living – including healthcare – would eat away at wealth.  

Headline findings such as these suggest wealth managers must be able to provide a range of investment products that provide superior returns but without exposing HNW Investors to undue risk.    

So what does this mean in terms of wealth management services?  Well, the role of the wealth manager is clearly to design and implement a strategy which aligns with the client’s circumstances, life goals, and financial objectives.  This requires not only expertise and market knowledge but also an appropriate range of products, which might include asset-backed secured investments and active risk management around assets.  

Let’s take an example.  The Route – City wealth club offers a secured loan product, backed by assets (typically property), which targets better than average returns with relatively low risk. This product is likely to appeal to those who see wealth preservation as a priority.  Meanwhile, our approach to risk management across asset classes is designed to mitigate volatility in the markets. 

But perhaps we should step back from trying to capture the zeitgeist for a moment.  The wealth management client base is not a homogeneous group with identical concerns and priorities.  Certainly, there are trends that can be captured but the real job of the wealth manager is to focus on the individual throughout all stages of his or her life. As the EIU survey finds, older HNWIs tend to be more conservative in their investment choices than the upcoming generation but that’s not universally true.  Some prefer to play safe, others seek exposure to higher returns and perhaps riskier investments. Crucially, however, investment priorities often change in line with personal circumstances and life goals. 

So arguably the role of wealth managers should be to create the kind of holistic and comprehensive offering that allows advice and management to be tailored to the individual’s circumstances and goals as they change and evolve.  This requires constant review. In the case of The Route, Members are offered two financial reviews a year to discuss a complete spectrum of investment, tax, and money management strategies.  

To find out how The Route can help call: 020 3141 9040


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