A recent study revealed that COVID-19 is the top financial concern amongst high-net-worth individuals (HNWIs), and as result of the pandemic, they are reassessing what they believe it’s worth spending their money on.
According to the Saltus Wealth Index — an extensive survey conducted by Saltus, a financial planning and investment management firm — almost a third of respondents believe that the pandemic, and its potential long-term effects, are the greatest threat to their wealth.
But how does this view vary between age groups, and what other factors are HWNIs concerned with? Perhaps, most importantly, how has the coronavirus crisis affected their spending habits?
Read on to find out more.
Identifying the biggest financial risks
The Saltus Wealth Index revealed the attitudes of HNWIs towards the UK economy, their own wealth, as well as what matters most to them personally. It surveyed over 1,000 respondents with investable assets over £250,000.
As previously mentioned, the coronavirus crisis came out on top as the greatest concern for HNWIs. However, the research found just 19% of those aged over 65 were worried about COVID-19 when it comes to their wealth. In fact, this age group was more concerned with inflation (50%) – in comparison to the younger generation, where just one in five under 35s cited this factor as their most significant worry.
According to the survey from the wealth management firm, other significant worries amongst HNWIs included:
- Low interest rates and financial returns
- Climate change
These factors, and the ongoing uncertainties they inflict, are causing some HNWIs to become nervous about their own position and wealth. However, this does not falter their confidence in the future of the UK economy (80% of respondents think so), and in particular, London’s place as the financial capital of Europe.
Again, this varies between age groups. As little as 5% of over 65s say they have confidence in the UK’s economic future, while, 37% of those aged between 18 and 54 feel very confident about the future.
Views differ across regions too. The most confident HNWIs reside in Northern Ireland, with 91% of respondents being positive about the state of the UK economy over the next 6 months. On the other hand, 36% of respondents in Wales are not confident about the UK’s economic prospects.
Those living in Greater London (41%) are more than twice as likely to feel confident about the UK economy over the same period than those living in the West Midlands (18%).
The impact of COVID-19 on spending and lifestyle
Those surveyed were not just asked about their thoughts on the economy, and how the pandemic has financially impacted the UK. The HNWIs were also questioned on their own personal circumstances.
It seems that the pandemic has also caused a shift in attitude towards lifestyle choices, as one in four respondents stated they have become more charitable as a result. This is most apparent in those aged 35 to 44, where one in three stated they are now more philanthropic.
Relationships are also at the forefront, valued more so now than before the pandemic, as the research revealed that 24% of individuals are spending more time with their children and grandchildren, and 28% are more attentive to their spouse.
When it comes to finances, COVID-19 has also driven HNWIs to reassess their expenditure. As a result of the pandemic and recurring lockdowns, more than a third of those surveyed said they have spent money on products and services that improve their experience at home.
The research also found the most money was spent on experiences, such as holidays, dining out and going to the theatre, whereas only one in five said that owning property was their biggest splurge.
Although it can be assumed the pandemic has influenced the way HNWIs value experiences over assets when it comes to their lifestyle, from an investment point of view, only 3% of respondents valued experiences and intangibles, compared to 81% ranking physical assets as better use of their money.
Disclaimer: Information is correct to the best of our understanding as at the date of publication. Nothing within this content is intended as, or can be relied upon, as financial advice. Capital is at risk. You may get back less than you invested.