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Wealth-X reports examine impact of global market volatility on ultra wealthy

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Two new reports from Wealth-X analyse the global factors that influenced the spending and investment behaviours of ultra high net worth (UHNW) individuals during the first quarter of 2016 and provide a forecast of these trends for the months ahead.

The Wealth-X Q1 Luxury Briefing identifies several key consumer-driven trends, including the fact that global market volatility is leading the ultra wealthy to seek out luxury items that they consider a long-term investment, such as paintings which will appreciate in value as opposed to luxury apparel. Wealth-X isn’t predicting a significant change in overall spending by UHNW individuals, but says there will be a transition in that spending over the coming months.

The report also reveal that Chinese luxury consumers are experiencing several factors that affect spending, including the Chinese government’s anti-corruption efforts and currency devaluation, however these consumers will continue to be a long-term driver of growth due to cultural expectations for the wealthy in China to show off their success.

In addition, luxury brands will continue their investment in digital capabilities to appeal to a new generation of luxury consumers by integrating engaging digital luxury narratives with their existing retail strategy.

The Wealth-X Q1 Finance Briefing examines global issues that influenced the ultra wealthy and the wealth management sector, and reveals that while UHNW individuals’ wealth is largely not exposed to the volatility of global equity markets, there is a heightened psychological impact prevalent in second generation UHNW individuals who see a loss of wealth as deeply concerning, while the first generation believes they can earn it back.

Depressed prices in oil production meanwhile are stalling wealth creation in the Middle East and it remains to be seen how governments in the region can create a work culture and business environment conducive to creating new wealth.

In addition, the report says that market turmoil has highlighted ultra wealthy clients’ lack of trust in their advisors, reinforcing a view they have had since the financial crisis in 2008, and the push to gain UHNW clients’ trust remains the most prominent wealth management trend of the decade.

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