The global pandemic has changed many things in our lives, such as the way we socialise, shop and seek financial advice. And for high-net worth individuals (HNWIs) it has changed their attitude towards money and spending.
According to a recent study, conducted by investment management and financial planning firm Saltus, 26% of HNWIs have become more philanthropic as a result of the pandemic. The research questioned over 1,000 respondents with investable assets over £250,000, about a range of topics.
It revealed how they felt about the UK economy and their own wealth, as well as what matters in their personal lives. The data collected formed the first Saltus Wealth Index, which launched in October 2021.
When it come to the subject of lifestyle, it seems that the pandemic has been a catalyst for change for HNWIs and what they consider it’s worth spending their money on.
Read on to find out more.
Changes in behaviour and lifestyle
It appears that the pandemic has not just affected the overall economy and our personal finances, but has also had a long-term impact on the life we lead. According to the survey, aspirations now include the desire to travel more, while 30% of HNWIs have learnt a new skill as a result of the pandemic.
This is closely followed by 28% of respondents who said that they are now spending more time with their spouse, and 24% who are investing more time with their children and grandchildren — despite the fluctuating lockdowns. Therefore, we can assume that HNWIs are valuing their relationships with loved ones more now, than before the coronavirus crisis.
As we alluded to in the title, one in four respondents felt they have become more philanthropic in the aftermath of the pandemic, feeling a need to give back when it comes to their wealth. This rises to almost one-in-three (32%) of those aged 35 to 44.
However, the impact of COVID-19 varies between different age groups. In fact, a staggering 62% of those aged over 65 said they have made no changes at all to their lifestyle, regardless of the pandemic.
Changes in spending habits
The survey found that COVID-19 has had a direct impact on HNWIs’ spending habits, with a shift in focus to investing more in experiences than owning physical assets.
More than a third (34%) of respondents stated that they have spent their money on products and services that improve the experience of being at home. This was the top response to the question: ‘Post-COVID have you made any lasting changes to your lifestyle?’
Experiences such as holidays (26%), dining out (8%) and going to the theatre (9%) have also dominated spending amongst HNWIs over material goods, with more than half (53%) admitting that these types of events were their ‘greatest splurge’. This is notably more than the 20% who said ownership of property in response.
Despite the fact that experiences outweigh physical goods from a spending perspective, the study reveals that HNWIs still believe physical assets represent a better use of their funds, in terms of investing. When posed with the question regarding what they see as a ‘worthy investment’, just 3% citied experiences compared to 81% who said assets, and only one in thirty believe intangibles are the worthiest investment.
Financial concerns for HNWIs
Although there have been some arguably positive outcomes of the pandemic when it comes to lifestyle changes, COVID-19 and the uncertainty it brings, remains the top concern of HNWIs and most believe it to be the biggest risk to their wealth (31%).
This highlights the importance of having a financial plan in place, or perhaps seeking professional financial advice, to ensure you meet your financial and personal goals in life during unprecedented times.
Disclaimer: Information is correct to the best of our understanding as at the date of publication. Nothing within this content is intended as, or can be relied upon, as financial advice. Capital is at risk. You may get back less than you invested.