Short View
Many HNWIs are poorer post-Brexit
With the majority of HNWIs in the UK
(14.3%) owing their wealth to the financial
services industry, the billions that have
been wiped off markets recently would
have directly hurt the pockets of many
HNWIs. Moreover, the storm has not yet
passed for HNWIs with investments in
certain macro funds which have revealed
deep losses. Bloomberg data has shown
that 15 of Britain’s wealthiest individuals
lost $5.5bn in the immediate market
fallout following the announcement.
Non-doms thrown into uncertainty
New rules on non-doms – the unique tax
status many foreign born HNWIs subscribe
to – were announced in the summer of
2015 and expected to be published
following the referendum. Their delay,
however, will add to the uncertainty of UK
resident and non-UK domiciled individuals
in the run up to the new rules coming into
force on 6 April 2017.
Luxury spending may decline as luxury
assets flourish
This is recessionary behaviour: As 2008’s
credit crunch forced HNWIs to clamp
down on their luxury spending, it also saw
an increase in the art, wine and precious
stone markets. Gold is already rising, but if
financial uncertainly looks set to stay,
many investors will buy into such tax
deductible assets as safe investment
options.
HNWIs in manufacturing will prosper
The manufacturing industry at-large, could
see an upturn in its fortunes as a weaker
sterling helps UK exports. Billionaire Brexit
supporters, Sir Anthony Bamford and
James Dyson will lead the way for a
temporary or prolonged boom for British
manufacturing business owners,
depending on the state of sterling.
Central-Prime Real Estate could make a
comeback
Again, a weaker sterling carries with it
certain advantages, this time for centralprime
property markets – mostly the areas
of London around Mayfair, Knightsbridge
and Chelsea. Having seen prices plateau
recently – partially in anticipation of the
referendum – the same areas are now
looking more attractive to HNWIs from
overseas as the sterling devalues against
their own currencies, notably the US
dollar.
Long View
Lighter regulation could benefit some
HNWIs
The bonus-cap may be one of the more
symbolic pieces of regulation imposed on
the City of London – and HNWIs – from
Brussels. However, other areas of finance
many benefit from lighter regulation,
anticipated as Brussel’s laws are replaced
with Westminster’s. One example is the
Alternative Investment Fund Managers
Directive (AIFM), which affects hedge
funds, private equity, real estate and other
alternative investment fund managers.
According to Deloitte, most UK-based
asset managers think AIFM reduces the
competitiveness of the EU’s alternative
investment funds industry, while Open
Europe thinks that it costs the UK £1.3
billion a year (based on 2014 estimates).
SMEs and other non-financial industries –
from fisheries to farming – may also
benefit from a lighter regulation, though
any immediate changes are unlikely.
Changes in the Private Banking sector
Private banking – an industry combatting
over-regulation and fin-tech disruption –
could yet see better years. In the
immediate future, private banking will
come into its own as proper financial
planning and risk management are
required to mitigate current market
volatility. Long term, the UK’s private
banking industry may appeal to overseas
HNWIs as the UK sets its own rules on
laws affecting HNWIs, such as antiavoidance
tax legislation. Should uncertainty in the Eurozone surpass that
within the UK, British banks may also
benefit from capital flight.
HNWIs will continue to come to London
Whatever the outcome of Britain’s
negotiation with the EU, it will not
diminish London’s lure among HNWIs (as
reported by Spears and WealthInsight last
month, it currently has more UHNWIs than
any other city in the world). London’s
superior education standards and quality
of life will continue to be as much an
appeal to migrating HNWIs as its financial
prowess. The capital’s strong judicial
system is already being used by foreign
billionaires to settle disputes in their home
countries, while its world class culture and
education attracts many with families.
With resident business leaders, London’s
financial sector will maintain its place both
in UHNWI rankings and among financial
capitals
Add Comment