Ethical investment and environmental responsibility remain low priority issues for UHNWs, according to a recent survey of 60 leading UK private client advisers
Ethical investment and environmental responsibility remain low priority issues for UHNWs, according to a recent survey of 60 leading UK private client advisers.
The survey, conducted by Scorpio Partnership and Kaiser Partner, asked private client advisers to rank a number of factors in terms of their importance to UHNW wealth management decisions and the amount of time UHNWs dedicated to them. It found that while ‘securing financial security for the family’ ranked highest both in terms of importance and effort, ‘investing ethically’ and ‘environmental responsibility’ were ranked as the lowest priority and lowest effort factors.
Factors such as ‘paying taxes’, ‘ensuring children share family values’, ‘operating within international law’ and ‘obeying industry regulations’ were ranked as medium priority/medium effort.
The results may come as a disappointment to those looking to promote philanthropy among the wealthy, and who believe that social or impact investing — investments that generate social as well as financial returns — may become a more popular tool for doing so. But Fritz Kaiser, executive chairman of Kaiser Partner, is more optimistic, saying that the results should not be taken to imply that ethical investing and environmental responsibility are not important, and emphasising that the survey reflected the view of advisers rather than their UHNW clients.
‘It would be misleading to assume that neither ethical investment or environmental responsibility are important, just because of where they appear on the chart. They continue to be important, but it is a matter of degrees. What our experience is showing us is that these factors are rapidly rising up the agenda of clients,’ he says.
He also believes that the results could reflect the failure of advisers to give enough weight to ethical and environmental issues in their dealings with clients. ‘Clients are interested in social, ethical and environmental elements and make the connection between this and their wealth. Everything is connected. It could well be that the professional advice community do not get asked to focus on this as much in their client interaction, and thus it is not considered as important. We plan to examine this further in 2012 and beyond.’
The survey also polled financial advisers on how clients choose jurisdictions when structuring their wealth. The majority of advisers said that in the past five years, economic stability and a stable tax environment had become more important factors when selecting jurisdictions. In contrast, only 13 per cent thought that banking secrecy had become a more important factor in the last five years, while 45 per cent said that it had either become less important or was not important when structuring wealth.
The respondents predict that future global financial centres will shift eastwards, with major players being Singapore, Hong Kong, and eventually, Shanghai. In Europe, however, Liechtenstein was a standout success, which Kaiser Partner attributed to the Liechtenstein Disclosure Facility. It described the LDF as ‘innovative steps to support the changing dynamics of cross-border wealth management.’ Fritz Kaiser and Philip Marcovici, a board member of Kaiser Partner, have been campaigning since 2008 for Liechtenstein to change its disclosure laws.