Magazine article Management Today

Wealth Management: Pickings Get Richer

Magazine article Management Today

Wealth Management: Pickings Get Richer

Article excerpt

Banks and financial consultants, from the venerable to the brash, are queuing up to handle the cash and investments of a burgeoning elite - those ultra-wealthy citizens at the apex of the economy. David Bain reports.

If the 10 years of the Tony Blair government will be remembered around the world for the Iraq war, on the home front it's likely to be for overseeing an unprecedented surge in the number of wealthy individuals in the UK. An inter- esting legacy for a Labour party prime minister, some might say. The power and influence of the nation's billionaires, multi-millionaires and mere millionaires is growing fast - as are their numbers. There are now nearly 500,000 people in Britain with pounds 500,000 or more in the bank, not counting their primary property.

Bankers call these people high net worth individuals (HNWIs), and their numbers grew by 8.1% in 2006, according to the annual Merrill Lynch Capgemini World Wealth Report. But HNWIs are at the bottom of the new wealth pyramid. Those with pounds 15m beyond their primary property - the ultra-high net worth individuals - number more than 5,000. And those right at the tip of the pyramid - the richest 1,000 - have a combined wealth of at least pounds 360bn, according to the Sunday Times Rich List. To become a member of this club, you'll need at least pounds 70m.

Ten years ago, the combined value of the 1,000 wealthiest people was just shy of pounds 100bn - so their wealth has increased by more than 260% in a decade. As the Rich List's creator since 1989 (and author of MT's annual Top 100 Entrepreneurs ranking), Philip Beresford has been ideally placed to observe this wealth explosion. 'UK billionaires, Russian oligarchs or Indian tycoons, they have never had it so good,' he says. Never was so much wealth accumulated by so few in such a short time.

'If Marx or Engels were still alive, they would feel the time was ripe for revolution, so great has the wealth gap become,' adds Beresford 'But enough of the prosperity has trickled down that the Bolsheviks have been kept at bay.'

For the man and woman in the street, the most blatant examples of the new class of mega-wealthy in Britain are perhaps to be found in the sports and entertainment industries - like the Russian mega-moneyed owner of Chelsea FC, Roman Abramovich. He is the billionaire poster child of 21st-century Britain - the owner of three super yachts, numerous mansions and, of course, a world-famous football team.

Then there are the footballers themselves, the top players earning as much as pounds 150,000 a week. And most of us know that entertainment stars like Simon Cowell, Anne Robinson and the Osbournes earn millions. Magazines such as OK and Hello give us many glimpses of their million-dollar lifestyles. We also know that those working in top financial jobs earn big money - more than 4,000 bankers in the City of London got bonuses of pounds 1m-plus last year.

Less well known, apart from Richard Branson and the Dragons' Den panellists, are the many millionaire entrepreneurs who, at the height of Blair's boom, were selling their businesses for record sums.

The centre of all this is the money metropolis of London - now the world's most expensive city for property, eating out and even contemporary art - where the swelling ranks of the ultra-wealthy have created entire industries to cater to their massive purchasing power and influence. In the financial services industry, thousands of advisers offer their banking and investment services to Britain's rich.

These are lumped together under the term wealth management, embracing anything from a provincial independent financial adviser offering mortgage advice for those with pounds 300,000 going spare, all the way up to the 'family office' - a personal bank, investment management firm and private-client law firm rolled into one, acting for families with, say, pounds 100m or more.

Taking this spectrum into account, there must be at least 150 financial firms in the UK catering to the needs of the rich. …

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