Financial plans of the wealthy post-COVID-19
Brown Shipley, a Quintet Private Bank, today announces the results of a comprehensive research study1
it has commissioned of the nations’ wealthy. The survey of over 4000 UK consumers included a representative sample of over 800 of the nation’s ‘wealthy’ – defined as those with more than £100,000 in assets that they can readily access, and over 350 of those with more than £250,000 in assets.2
The research looked at how the wealthy had amassed wealth and what they want to do with the money they have, with some surprising results. Perhaps of most interest in the times of uncertainty with COVID-19, nearly one in five (19%) of those with more than £250,000 in assets said they intended to buy a small business in the future to keep themselves busy, and a further 35% said they are planning on investing in a new business to help kickstart the economy post COVID-19.
Just under half of those wealthy individuals surveyed said they would leave an inheritance (48%). This increases slightly to 53% of those with more than £250,000 of investible assets. If this is a fair representation of the UK population, 1 in 5 (c10 million)3
UK adults could fall under our definition of ‘wealthy’, which suggests that 5 million families may not receive an inheritance.
For those with more than £250,000 in assets, apart from leaving an inheritance, the other plans for their wealth include:
- Just over one in two (52%) will use the wealth to spend money on themselves, for example on holidays; whilst almost one in six intend to buy luxury items, such as an expensive car or yacht (17%)
- This is almost the same as those that wish to support a worthy cause (19%)
- Almost six out of ten (59%) will use their wealth to fund their retirement
Whilst half plan to leave an inheritance, nearly four in ten (39%) plan to gift some of their wealth to their families.
Regardless as to whether the wealthy plan to leave money when they pass on – the lack of planning for the future is of concern. Only four out of ten (40%) say they had plans in place to pass on their wealth to minimise the tax paid by beneficiaries. Approximately one in three (34%) say they will put in place plans in the next five years to minimise tax on their beneficiaries; whilst just over one in five (22%) say they never will.
Commenting on the research, Alan Mathewson, Chief Executive Officer of Brown Shipley said, “Whilst it is great to see that there could be significant reinvestment by the wealthy in UK businesses post COVID-19; it is worrying that so many haven’t made plans for their estates. Solid financial planning is about wealth preservation today and having a wealth plan to meet future needs and we believe all can benefit from putting their estate in order, today.”
The research also reveals how today’s wealthy, gained their affluence. Almost one in three (30%) of the nation’s wealthy credit an inheritance for contributing to their wealth; whilst 56% cite earnings from salaried work; and nearly one in five (18%) say it is down to their entrepreneurialism. Perhaps surprisingly nearly one in fourteen (7%) say that a lottery win; or gambling has helped them become affluent. Other factors that the wealthy say have helped them amass financial assets include the performance of their pensions (44%); and investments (34%); whilst more than one in four (27%) have been helped by the property market.
1: Opinium Research asked a representative sample of 4,002 UK adults between 16th-18th June 2020. 817 of these have estimated financial assets in excess of £100,000. These are described as ‘wealthy’ in the press release. 357 of these have estimated financial assets in excess of £250,000 are described as ‘ultra-wealthy’ in the press release.
2: Financial assets include all assets apart from the main financial residence.
3: There are 52 million UK adults (ONS 2018). The Brown Shipley Research reveals c20pc of these, claim to have assets of more than £100,000 – or 10,608,000.
The information contained in this article is defined as non-independent research because it has not been prepared in accordance with the legal requirements designed to promote the independence of investment research, including any prohibition on dealing ahead of the dissemination of this information.
How to Use this Information
This article contains general information only and is not intended to constitute financial or other professional advice or a recommendation that any recipient of this information should make any particular investment decision. Always consult a suitably qualified financial advisor on any specific financial matter or problem that you have.
Except insofar as liability under any statute cannot be excluded, neither Brown Shipley nor any employee or associate of them accepts any liability (whether arising in contract, tort, negligence or otherwise) for any error or omission in this article or for any resulting loss or damage whether direct, indirect, consequential or otherwise suffered by the recipient of this article.
Investing in stocks either directly or indirectly carries investment risk. The value of equity based investments may go down as well as up over time due to factors such as, market volatility, interest rates, and general economic conditions.