High net worths vary in their outlook for the economy

According to the report, high net worth individuals in the Gulf are among the most confident about the likelihood of a global economic recovery, with one in three expecting growth to take place over the next few years.

This compares with fewer than one in five, or 19%, of Europeans feeling the same way, and only 13% of Americans sharing this level of optimism.

Spain, Qatar, Saudi Arabia, Ireland and India are described as the “Top Five Optimists” – in declining order of their optimism, based on interviews with their UHNW residents – while Monaco, Japan, the US, Switzerland and the UK are described as "The Top Five Pessimists”.

That wealthy people in countries as hard-hit as Ireland and Spain have been by the recent financial crisis would also rank among the world’s most optimistic might seem improbable, admitted Barclays Wealth chief economist Mike Dicks, but he said their  positive outlook probably reflected  “an assumption that things can only get better”.

“Ireland, once dubbed the Celtic Tiger for its rapid economic growth, now faces a huge budget deficit with investors worrying about its ability to repay debt.  Spain faces similar problems. Despite this, respondents in both countries feel that things will bounce back at some point in the next few years, and this is reflected in their responses,” Dicks said.

Experiences colour attitudes

The tendency of Irish and Spanish high-net-worths to base their outlook for their economic future on local market experiences is also typical of wealthy individuals everywhere, according to David Semaya, who heads up the UK and Ireland’s private banking operations for Barclay Wealth.

Yet although there may be “grounds for optimism” in some local economies, “in the UK the outlook among wealthy investors is cautiously pessimistic,” he noted.

“Uncertainty over the UK’s budget deficit, and an indeterminate political outlook, have left some investors feeling wary."

Barclays Wealth Insights

Entitled The Changing Wealth of Nations, the report is the eleventh in the  Barclays Wealth Insights series and features the results of a poll of more than 2,000 high net worth individuals across the globe.

According to Barclays Wealth, the survey highlights a “polarisation of opinion on the global economic outlook, and a perceived lack of clarity over the potential for investment growth”.

Against this backdrop, “a new ‘wealth-consciousness’ is emerging as wealthy investors seek greater knowledge and information about investment and a straightforward approach to wealth management,” Barclays Wealth added.

High-net-worths like property

Among wealthy investors globally, property remains the most favoured asset class despite recent collapses in such markets as Ireland, Spain and Dubai. In the UK, half of those queried said they believed property will perform well over the coming year. 

And curiously, although 51% of high net worth individuals surveyed said they were avoiding perceived high risk investments more than they did before the recent economic crisis, this figure suggests around 49% have not become more cautious with respect to such high-risk strategies.

Still, almost a third (30%) said they werereading the financial press more than before and more than a quarter, or 26%, are spending more time talking to family and friends about investment or consulting their financial adviser more frequently than they did in the past.

Wealthy investors are also “demonstrating increasing self-reliance in managing their portfolios”, according to Barclays Wealth, with 43% reporting that they are reviewing their investment portfolios more now than before the downturn. 

The report also finds a “widespread engagement among the wealthy in closely managing their financial affairs”, with a quarter spending between two and five hours per week actively investing their money, 16% spending five to twenty hours and 10% spending more than twenty hours per week. 

            Source: Barclays Wealth Insights 2010