Post COVID-19 Trends: 31% Of Wealthy Individuals Intend to Support the Economy by Buying A Small Business
Brown Shipley, a Quintet Private Bank, has announced the results of a comprehensive research study of the nation’s 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, 350 of whom have more than £250,000 in assets.
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, 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. The research suggests that 1 in 5 (c10 million) UK adults 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:
- One in two (52%) will use the wealth to spend money on themselves, for example on holidays; whilst 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, 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. One in three (34%) say they will put in place plans in the next five years to minimise tax on their beneficiaries; whilst 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. 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 one in five (18%) say it is down to their entrepreneurialism. Perhaps surprisingly one in twelve (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 one in four (27%) have been helped by the property market.