FOREWORD | OUR RESEARCH | 2020 AND COVID-19 | 1. TRANSPARENCY | 2. RELOCATION | 3. FAMILY & GENERATIONAL WEALTH | 4. THE ADVISER OF THE FUTURE | ABOUT BDO
2020 AND COVID-19 (01) | 2020 AND COVID-19 (02)
DISRUPTION AND DECISION-MAKING 2020 AND COVID-19
GRAPHIC 1:
Political and social unrest continues to foment, not least in relation to racial justice, gender equality and ethical capitalism, serving only to further heighten scrutiny of wealth holders. Indeed, shifting attitudes to
2020 has delivered a radical shock to the global economy, described to us by one investment management professional as an “existential jolt”
Stock market commentators have been quick to caution against underestimating the impact of COVID-19. In March 2020, Standard Life Aberdeen Chief Executive Keith Skeoch told CityWire that while we had reached “peak panic” in relation to the pandemic, peak pessimism was still to come. The prospect of increasing tax burdens is also toward the top of the agenda (Graphic 3) and we are already seeing such concerns materialise, with proposals for the introduction, or raising, of wealth tax levies around the world. Canada and New Zealand are among those actively considering tax policy changes while, in the US, the 2020 election has been underpinned by conversations around the correct and acceptable level of taxation for the nation. In response, and presumably in an attempt to mitigate these concerns, our survey data shows that HNWI priorities for the coming 12-18 months are dominated by seeking new growth and investment opportunities (cited in Graphic 2 as a top three priority by 66.8% of respondents) and by de- risking portfolios and mitigating against disruptions (53.2%).
TOWHAT EXTENT HAS COVID-19 AND THE LOCKDOWN RECESSION FORCED ALTERATIONS TO HNWI WEALTH PLANNING STRATEGIES OVER THE COMING 12 TO 18 MONTHS? PLEASE CHOOSE ONE ANSWER.
representing a “global heart attack”. The seismic effects of COVID-19 and the global lockdown recession are still to be fully understood by us, no matter which jurisdiction we are based in. It is nevertheless anticipated that the road to economic recovery will include tax policies built upon the expectation that those who can pay more, should pay more.
wealth are playing out at a global, national, local, community and family level. Private clients must respond appropriately. More than ever, careful decision-making is paramount. Wealth owners must identify the threats and opportunities, establish
“Shifting attitudes to wealth are playing out at global, national, local, community and family level. Private clients must respond appropriately.”
44%
34%
their priorities in response to emerging concerns, and make sensible alterations to long-term strategies. Our survey reveals that COVID-19 is causing HNWIs to rethink planning strategies in some way, shape or form, according to a majority of respondents (57.2% are planning either significant or judicious alterations, while less than 9% plan to do ‘nothing at all’). But what, specifically, is causing concern? Graphic 3 highlights that the cooling investment climate is a worry for most (63.2%).
There is an acknowledgement, as one wealth management director told us, that “changes stemming from COVID-19 will be higher taxation and that there will be a drive for the wealthy to contribute more”. Non-compliance is being met increasingly with punitive measures, not least in the court of public opinion. One corporate services provider told us how they urge wealth owners to assess how high the risk of becoming “cannon fodder” is. “Wealth being shoved in people’s faces won’t go down well”, they added.
13%
8%
very much / significant alterations
moderately / judicious alterations where necessary
not particularly / minor alterations
not at all / no change
WORLD OF PRIVATE CLIENTS | NOVEMBER 2020 6
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