Knight Frank is out with their 2017 Wealth Report, and it like others projects significant growth both in the Ultra High Net Worth (UHNW) population and their cumulative wealth.
While the past 30 years have seen record levels of wealth creation within the upper echelons of the one percent and an epic number of new and highly valuable companies launched, the Super Rich have concerns about the transfer of wealth to their children, and believe it or not, inheritance taxes were not number one.
The survey asked, What are your clients’ biggest concerns regarding how they will pass their wealth to the next generation?
The top answer globally with 62% was “Next generation will squander or mismanage their inheritance.” This concern was highest in Australia (84%) and North America (83%) and lowest in Latin America (33%).
Dividing wealth equitably between children (52%) is also a key issue, particularly with multiple marriages and groupings of offspring, while 46% say the next generation should earn its own money.
Groups like #RichKidsofInstagram make good newspaper articles and generate a lot of clicks for those that earn money generating clicks, however, if true, the Knight-Frank research should cause some consternation with luxury marketers.
If UHNW adult children are looking to their parents on when it’s OK to spend on luxury, and perhaps are over-conscious about their luxury spending habits, not wanting to create a poor impression with mom and dad and perhaps risking their significant inheritances, it brings an interesting new dynamic to the Super Rich household.
I see it in two parts: UHNW children will perhaps spend less than normal until the wealth transfer, but post-transfer, there is a potential for a surge. From a shorter point of view, it also may mean marketing to both generations at the same time as an interesting strategy and a strong reminder the spending ethos of Super Rich families often starts at the top.
Source: Knight Frank
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