Albert Einstein. A human being whose neurological connections moved at the speed of lightning. Yet in a moment of brilliant and unforgiving honesty, he once exclaimed – “The hardest thing in the world to understand is the income tax.”

We are quite certain many would agree. The puzzlement in finding appropriate tax structures has been a concern for decades, and in fact, results from our ‘Essential Wealth: The interplay between self and society’ report proved this.

Broadly, the European wealthy tend to consider financial products for reasons other than tax optimisation. The French are the disruptors in this case however – we found that 63% of French HNWIs have a life assurance contract in order to be more tax efficient. But these solutions are tools with high potential, not only in France, but globally, due to the benefits they can reap when it comes to succession planning, portability, and investments.

And as HNWIs become an increasingly mobile clientele, competition in the industry is expanding from being purely domestic to much more international. Inevitably, some key financial centres are emerging as key players in the wealth management space.

Luxembourg being one of them, has developed a core presence in the life assurance market.

 

Read more about the wealthy and how they feel about tax in our latest thought leadership paper below.

 

Two in every five high-net-worth individuals surveyed in our most recent report, Essential Wealth, believe they are paying too much tax.

Their sensitivity to tax compliance means that an increasing minority are leveraging the legal solutions available to improve their tax rate, such as Independent Savings Accounts.

There are numerous tax efficient solutions out there! And having a Luxembourg life assurance contract happens to be one of them.

Contact us to find out more, and click here to read more of our most recent thought leadership report.

 

 

Amongst the 600 high-net-worth individuals we spoke to in our most recent study ‘Essential Wealth: The interplay between self and society’, more than half highlighted the anxiety they feel in relation to wealth creation.

These feelings of anxiety rise to 58% for those younger investors, under 35.

Equally however, it is this new generation of HNWIs that are generally more financially-educated, with an increasing thirst for knowledge and understanding to support all financial decisions they make. This is an opportunity for financial experts to jump in and play an increasingly supportive and indispensable role in these younger wealth creators’ discovery journey.

Warning – advisers must be wary however, of the importance in striking the right balance between the inevitable digital transformation and evolution to robo-advice, with the necessary levels of interaction these clients will request.

Access our most recent thought leadership release below.

 

“A man’s true wealth is the good he does in this world” – these words hold true for many of the European HNWs surveyed in our Essential Wealth report.

 

 

Sixty-nine percent of our respondents believe that their wealth has been a positive force in improving their social engagement, increasing the interactions they have had with their communities.

Interested in learning more about the ways in which the wealthy engage with the world around them?

 

Access to our most recent thought leadership report, written in collaboration with Scorpio Partnership, by clicking below.

 

The wealthy often get a bad rep and are portrayed as the greedy, fat cats of society.

But actually, we have found that this could not be more incorrect – results from our report have showed that when it comes to wealth creation, HNWIs believe that obeying industry regulations, carrying out fair business practices and paying taxes compliantly are all of utmost importance.

 

 

In fact, 6% of HNWs readily admitted that they believed they should be asked to pay more taxes! Similarly, these European HNWs were very keen to emphasise that one of their main goals was ensuring their children would share similar attitudes to society, seeing social responsibility and philanthropy as an obligation they should take on whole-heartedly.

As such, the advisor working with HNWs plays a hugely important role in ensuring their clients receive the best possible advice and more up to date industry information. Previous research we have done however, found that a large number of these HNWs do not even have a professional advisor.

So perk up your ears, advisors!

Here’s a tip – millennials are the critical segment to target as we believe it is never too early to receive financial advice. Although claims that the younger population of wealthy individuals as digital natives will prefer to use robo-advice are abundant, a personalised approach can help them prepare better for the medium to long-term financial view.

Advisers can be the guardians of their wealth, accompanying them throughout their life journeys, paving their way to success from an early start. Our ‘Essential Wealth’ report is now available for download.

 

Click here to get your hands on a copy!

 

Wealth is like a hedonic treadmill – as soon as the desired wealth level is reached, the novelty settles and a newer, higher goal is set.

 

 

European HNWIs believe that to be considered ‘wealthy’ they must have over three times their current wealth level.

For those with assets of less than EUR2 million, EUR7.1 million is the entrance point in their minds, to be considered truly ‘wealthy’. Those with more than EUR5 million in net worth on the other hand, aspire to reach the EUR21.5 million mark. These insatiably ambitious HNWIs seek solutions which will increase their capital and combine high return with security and transparency.

The support of financial partners is needed to help them figure out which assets suit their profile, and whether to stick to the basics or take the plunge and be more adventurous.

Inevitably, these are all essential decisions to be made in conjunction with an adviser but previous research carried out by OneLife revealed that only a minority had professional support in these areas (Futurewealth 2015, Paper 1). Interested in learning more about the taboos of wealth?

 

Click below to download the report.

 

On a scale from religion to sex, how hard is it exactly to talk about wealth?

 

 

For the 600 European HNWs we polled, sex came in first as the most difficult topic to speak about. Respondents then voted the grim theme of death and personal relationships as next in line, with wealth falling in the middle of the spectrum above politics, health and religion.

For advisers, this means more attention needs to be paid to personal and psychological perspectives when advising and managing relationships with high-net-worth individuals. Integrating this additional layer of support to the financial aspect can not only improve client-advisor mutual understanding but also help establish the best long term plan.

 

Delve into the rest of our ‘Essential Wealth’ report by clicking below.

 

Abraham Lincoln once stated that in his experience, “folks who have no vices have very few virtues.”

 

When asked what European wealth creators perceive as their worst qualities, laziness, greed and jealousy come up top.

However, they also acknowledge their foremost positive characteristics are their honesty, kindness, generosity, and their willingness to engage positively with the world around them. After a clear rise in HNWIs’ involvement in philanthropic activities post-economic crisis in 2008, providers need to start taking this aspect into consideration more seriously.

Why? Because the wealthy are increasingly willing to be the changing force in society. HNWs are interested in witnessing the ripple effect of their actions in tangible environmental, social and ethical ways. And perhaps, because they are thinking more about their futures, our research shows that millennials feel this responsibility much more strongly than the baby boomer generation.

PwC and UBS’s studies support this suggestion, additionally recommending that wealth advisors keep an open mind about investment decisions when servicing millennials. The advisors of the future will need to be able to further understand younger HNWs’ aspirations and anxieties related to giving, as well as develop an appreciation for the feelings of social responsibility this generation has placed upon itself.

 

Download our most recent thought leadership report ‘Essential Wealth: The Interplay between Self and Society’ to find out more!

 

Even at a young age, we are consistently told how inappropriate it is to ask adults how much money they make. And as we grow older, the social rules and norms quickly settle in and it becomes commonplace to shy away from any conversation regarding income, expenditures and wealth.

We became curious – why is it that there is so much taboo around the topic of wealth? What are the roots of these feelings of discomfort?

As a result, we decided to poll 600 HNWIs to find the answer.

 

Our findings indicated that very often, the avoidance of this topic stems from wealth creators’ perceptions of a change in attitude from those around them once wealth levels have been revealed.

Ultimately this leads to HNWs feeling vulnerable about people taking advantage of their socially-minded nature.

22% of our respondents stated that this was the most frequent reaction in discussing wealth with others. Interested in learning more about why wealth is a taboo subject?

 

Keep your eyes peeled for the release of our latest thought leadership report!

 

At what point in the wealth race do European wealth-creators start feeling like they have officially made it?

What wealth level is actually considered ‘wealthy’ for this group of individuals? Our upcoming paper ‘Essential Wealth: The interplay between self and society’ asked 600 European HNWIs from six different countries what it means to be wealthy. The majority (60%) agreed that it means not having to worry about money every day as well as being able to achieve financial security for their family.

 

What has become clear to us is that wealth has the contradictory ability to heighten an individual’s sense of freedom, whilst simultaneously increasing their sense of responsibility.

 

Watch this space for our upcoming report release!