Barclayswealth Report 0910
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Transcript of Barclayswealth Report 0910
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Barclays Wealth InsightsVolume 12: The Age Illusion
In co-operation With Ledbury Research
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B
About Barclays WealthBarclays Wealth is a leading global wealth manager, and the UKs largest, with total client assets of 153.5bn,
www.barclayswealth.com
and www.barclayswealth.com/insights
Follow us on www.twitter.com/barclayswealth and www.twitter.com/wealthinsights
About this report
Researched by Ledbury Research and written in conjunction with Barclays Wealth, this 12thBarclays
Wealth Insights
high net worth community.
Respondents were drawn from 20 countries around the world, across Europe, North America, South America,
For information or permission to reprint, please contact Barclays Wealth at:
or email [email protected]
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1
ForewordAcross the world there are many preconceptions held about older people. It is widely thought that age acts as
Insights report; The Age Illusion:
of this group.
I hope that you enjoy this latest chapter.
Thomas L. Kalaris
Barclays Wealth
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2
Our Insights PanelMatthew Brady
Gordon Gibb, Entrepreneur
Dr Sarah Harper
John Llewellyn, Llewellyn Consulting
Helen Pitcher, Chair of IDDAS
Dick Pyle
Phil Smith
Dr. K K Tse, Founding Chairman, Hong Kong Social Entrepreneurship Forum
Steve Vernon, US Author, Columnist and Actuary
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The Age Illusion:How the WealthyTheir Retirement
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Introduction
recent phenomenon. When retirement schemes were
th century, retirees
retirees are often enjoying 20 to 30 years of leisure
in its current form has become unsustainable, both for
is therefore unrealistic.
to do so. Todays older generation can often be found
using their retirement years to start a new career, set up a
choosing not to do so.
wealthy people to doubt whether planning for a sustained
or sensible option. Worries about the unpredictability of
This report, the 12thBarclays Wealth
Insights
considers what retirement means to todays wealthy.
It draws on insights from wealthy entrepreneurs and
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Many wealthy individuals will neverstop working.
engaged in what we would traditionally regard as their
Unpredictability is a fact of life.
money needed to maintain their lifestyle in retirement
other factors, such as their personal health or rates
Planning for your later years is challenging but
essential.
stages of life in different ways. But whether they plan
than a radical change in the way in which we plan for
and fund later life.
Attitudes will continue to change.
creating jobs and growing their wealth: as such, they
up with reality. The corporate sector will gain from their
and growing their wealth.
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The research has highlighted an interesting and,
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a pleasant lifestyle, and some hard physical labour.
For Mr. Pyle, the most important thing about retirement
Chart 1 No matter what my age, I envision being involved in commercial/professional work of some kind.*
All
By wealth level
By source of wealth
By age
1m-2m
2m-10m
10m+
Inheritance
Entrepreneur
Earnings
Property
Investment gains
60%
57%
63%
60%
57%
68%
58%
68%
64%
Under 45 70%
45-54 65%
55-65 52%
Aged 65+ 50%
* % of respondents completely agreeing or slightly agreeing with this proposition.
Source: Ledbury Research
15 years of pension-funded retirement.
What is particularly interesting is that this phenomenon
through entrepreneurship. In fact, the source of wealth
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* % completely agreeing or slightly agreeing with the proposition that No matter what my age, I envision being involved in commercial/professional work of some kind.
Source: Ledbury Research
Saudi Arabia 92%
UAE 91%
Qatar 89%
South Africa 88%
Latin America 78%
Hong Kong/Singapore 56%
US 54%
Japan 46%
Spain 44%
Switzerland 34%
Programme, she has recently completed a study on
so much to offer, but maybe want a second career.
Maybe you want to do something different, or maybe
As Sarah Harper, Professor of Gerontology and Director
differences across the world. Of particular note is that
in some cases fewer than 10 percent. Amongst the
Spain and Japan.
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Chart 3 If you have already stopped working, how important were the following factors in the decision?*
* % citing the factor as very important.
Source: Ledbury Research
By wealth level All 1-2m 2-10m >10m
Made enough money to do so
Desire to do something different
Ill health
State of the economy
Simply reaching the normal age to retire
Pressure from family and friends
regarded as an automatic reason to retire. Indeed, as the
not going to retire as our parents or grandparents did,
decision to retire. This lagged behind most other factors,
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Chart 4 Aspirations for when youve stopped working vs. the reality*
again in the commercial world.
Source: Ledbury Research
Under 45 45-54 55-65 65+ Over 65
Spending time with family
Socialising
Hobbies
Sports
Politics
It is both scary and
your life around and doing
in the future. The results, as the table below shows,
their hobbies and socialising.
do manage to translate this aspiration into reality:
to follow dreams and to do something completely
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little to do with money, but is rather due to their job
Most of the people we
of time and structure to the day. The prospect of an
empty day after retirement can unsettle. But rather
they want to do. Some of these wishes, ignored before,
second thoughts a year or two down the road.
chain. As Helen Pitcher puts it, The biggest change is to
people why certain things should happen. Old habits
can die hard, and she recommends to always try to
of self-analysis and she notes that many of the most
boards are being encouraged to be more transparent
about succession issues, this process can also be seen
on in life. Retiring in your 50s will be seen as outdated,
and there will be more people routinely on boards in their
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Life is unpredictable for all age groups. But, for those
their retirement can be compounded by concerns about
personal health. The result, as shown in Chart 5, is that
belief in the predictability of most factors surrounding
the amount of money needed to maintain their lifestyle
of money needed may be misplaced, if only because it
is impossible to predict the age at which you will die.
their health as predictable, and the differences can be
points out, is poor health and particularly the need for
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Chart 5 What factors are predictable?*
* % of respondents under 65 believing that these factors are quite predictable or very predictable in later life (aged 65+).
Source: Ledbury Research
Total
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Chart 6 When planning for your retirement, how predictable is the rate of return on your investments?*
Chart 7 When planning for retirement, how predictable is the rate of tax that you will have to pay?*
America are, perhaps surprisingly, optimistic; but it
here. Respondents in the UK, US and Ireland are much
more sceptical.
* % of respondents aged up to 65 believing that this is quite predictable or very predictable.
Source: Ledbury Research
* % of population aged up to 65 believing that this is quite predictable or very predictable.
Source: Ledbury Research
By region
Europe 35%
North America 41%
Latin America 73%
51%
Rest of World 61%
By age
57%
45%
39%
n/a
Saudi Arabia 76%
Latin America 73%
India 71%
Spain 66%
South Africa 63%
Switzerland 73%
Hong Kong 70%
Monaco 68%
Singapore 65%
Latin America 58%
Monaco 39%
Qatar 33%
Ireland 28%
UK 27%
Japan 26%
Qatar 35%
US 35%
Saudi Arabia 34%
UK 34%
Ireland 30%
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Succession: the baby elephant in the room
directly under control, and less unpredictable. But life can
in regard to faith in their ability to manage wealth.
it may increase it. Retirement has traditionally been a
* % of respondents slightly agreeing or completely agreeing with this statement.
Source: Ledbury Research
UAE 98%
Saudi Arabia 95%
Ireland 83%
Qatar 82%
South Africa 80%
By wealth level
1m-2m 55%
2m-10m 56%
10m+ 67%
UK 51%
US 44%
Japan 41%
Australia 39%
Switzerland 38%
According to Phil Smith, Head of Financial Planning at
people may be retiring later this certainly does not mean
that they should put off succession planning. It actually
means that they should start planning much earlier as
their wealth may increase and the situation can become
strong case here for robust succession planning much
than other wealth groups.
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Chart 10 I think my children have a proper understanding of money*
* % of respondents slightly agreeing or completely agreeing with this statement.
Source: Ledbury Research
By region
Europe 68%
North America 70%
Latin America 83%
65%
Rest of World 63%
By age
58%
66%
70%
75%
Monaco 87%
Latin America 83%
Spain 77%
Hong Kong 75%
Australia 71%
UK 63%
South Africa 61%
UAE 55%
Qatar 54%
Japan 46%
By wealth level
1m-2m 65%
2m-10m 68%
10m+ 74%
We attempted to capture such worries about the ability
respondents whether they thought their children had
not on the whole more sceptical about their childrens
children had a proper understanding of money than
other wealth groups.
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to their descendants. Japan again is the outlier here.
sizeable amount of their wealth to their family.
on their wealth.
Chart 11 Passing on wealth to the next generation*
* % of respondents slightly agreeing or completely agreeing with the statement When I die, I wish to leave a sizeable amount of my wealth to my
children/grandchildren/family.
Source: Ledbury Research
Qatar 94%
UAE 91%
Monaco 91%
Saudi Arabia 86%
South Africa 85%
Australia 67%
UK 65%
Ireland 65%
US 62%
Japan 42%
Entrepreneur Gordon Gibb
of it. As an entrepreneur, he puts more emphasis
he issue of succession. As he points out, it can often
management of wealth within families, both within
generations and between generations. The problem
here can be how to reconcile different beliefs within
the family on how the business should progress;
the second generation. Once this is done, there
them a way to do something different.
sort of culture where it is possible for the rest of
their management team to tell them when it is
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as a safety net and to enable wealth transfer to
Financing thethird stage
to predict for the population as a whole.
Whilst it is possible to set down some basic
are inherently contradictory. Varying priorities and
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for retirement.
Phil Smith, Head of Financial Planning at Barclays
Safe
Decent returns.
people do not pay enough attention too. There may
income and capital.
Flexible.
Inheritable.
problem sometimes with annuities or many
forms of pension plans.
1 Barclays Wealth nor its employees renders tax or legal advice and readers should consult with their accountant, tax adviser or lawyer regarding their personal circumstances.2
1
2
crisis has underlined the need for a proper asset
asset classes.
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in fact seen an increased interest in long-term estate
this remains a source of concern.
of retirement, rather than a radical change in the sorts
Phil Smith adds: There is a trend to pass on wealth to
wealth. Trusts are a popular way to do this as they offer
the opportunity to plan how much wealth is distributed
whether it be as a lump sum or regular income stream;
whilst also allowing for the grandparent to specify at what
3
3 Barclays Wealth nor its employees renders tax or legal advice and readers should consult with their accountant, tax adviser or lawyer regarding their personal circumstances.
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better health, and will change further in the years to come.
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There is, perhaps, a preconception amongst some that
is a growing understanding that the older generation
Llewellyn of Llewellyn Consulting, that realisation has
In his recent paper Conditions for Growth
argues that increasing the statutory retirement age, and
encouraging higher participation rates in the labour force
in the years leading up to retirement, will lead to higher
rates of GDP growth.
Mr. Llewellyn points out that the number of older men
in the UK labour force has in fact fallen sharply in the last
since then: This is a trend in the right direction but it
says Mr. Llewellyn.
Allowing both male and female participation rates in the
blessedretirement
physical labour. But it is not the case anymore for many
in a time of high unemployment, may feel that this is
creates its own demand. If it werent true, then all the
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the concept of retirement
contributing to society in
some way, shape or form
Steve Vernon, US Author, Columnist and Actuary
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if immeasurable, impact on the corporate scene.
facto age for stepping down from board appointments
stay the course. These tensions may become particularly
The hardest demon to
wrestle with is accepting
when its the right time for
associated with wealth transfer within families.
they will not feel obliged to accumulate so much during
spending needs, but not necessarily the resources to
meet them. In other words, they might be seen as a
This may, perhaps, encourage the use of family trusts
or similar arrangements amongst more segments of
the wealthy population. But it may also encourage more
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Contact us
email [email protected]
www.barclayswealth.com
Conclusion
for the economy and the corporate sector. As well
as contributing both directly and indirectly to GDP,
boards and businesses in the corporate and not-for-
remaining in circulation.
decline a traditional retirement is that they do not defer
place approaching retirement age. Ongoing discussion,
their business interests, or a need to change further
consider the timing of and rationale for transfers of
wealth within their families.
sight, it should not be out of mind.
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Legal note
of this information, neither Ledbury Research nor
Barclays Wealth can accept any responsibility or liability
for reliance by any person on this report or any of the
information, opinions or conclusions set out in the report.
This document is intended solely for informational
purposes, and is not intended to be a solicitation
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