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Epicure Spring 2017

The World’s Wealthiest Individuals Are Redefining Luxury

There are 212,615 ultra-high net worth (UHNW) individuals living around the world. Wealth-X, the leader in global wealth insight, revealed in the World Ultra Wealth Report 2015-2016 that the number of individuals with US$30 million or more in net assets grew just 0.6% and their total wealth increased by 0.8%. While this growth may seem meager, the economic importance of this demographic is as strong as ever; accounting for just 0.004% of the world’s adult population but controlling 12% of its total wealth.

Around the world, it is the highest ranks of the UHNW population who are experiencing the most success. Billionaires saw their wealth grow 5.4% — more than double the rate of global economic growth, while collectively other tiers saw their wealth shrink by 0.6%. However, as wealth matures in younger economies, the transfer of wealth has seen a growing class of second-generation ultra-wealthy emerge. The way in which this second-generation pursues luxury goods and services, can differ significantly from that of their parents.

The UHNW Profile

On average, UHNW individuals are likely to be male, married and in their late 50s with a net worth of US$141 million, experiencing an average increase of US$290,000 year on year. Finance, banking and investment remains the most significant industry in which to find the ultra wealthy, but its lead has shrunk while the percentage of UHNW individuals involved in manufacturing has grown by 3% since 2014.

UHNW individuals hold their wealth in a diverse mix of investments:

· Private holdings (ownership of privately owned companies and other private equity stakes) account for 35.1% of a UHNW individual’s assets.

· Public holdings such as stock-market listed equities account for 34.8% of average UHNW total holdings.

· Cash holdings account for 22.2%, a figure that continues to grow steadily and is predicted to continue.

· Real estate and luxury assets have remained steady, accounting for just under 9% of total wealth.

By 2020, the global UHNW population is expected to exceed 318,000, with total wealth rising 54% to US$46.2 trillion. In this same time frame, Wealth-X predicts that US$3.9 trillion in UHNW wealth will be transferred to the next generation.

UHNW individuals spend US$234 billion on luxury products and services, representing about 18.9% of the total luxury market, and a younger generation of wealthy individuals is now transforming the broader luxury landscape that UHNWs have access to.

The fact that the experiential luxury sector consistently out-performs any other sector of luxury goods is testament to a fundamental change in attitudes. It means that the ultra-wealthy have shifted from the acquisition of goods to savoring unique experiences that no one else can have – and that are completely tailored to one’s personal tastes.

Both inheritance and entrepreneurial wealth accumulation are driving this shifting wealth demographic. The change is marked by a move from accumulating tangible assets to pursuing rare, tailored experiences. In part this is because such uniqueness both confers and confirms high status for those who can secure such experiences.

To understand what unique experiences will be sought out, Wealth-X identifies three factors that mark them out as desirable: time for making every moment really count; privacy during the experience; personalization to meet both individual tastes and to provide something truly unique.

There are three main influencing factors for a luxury experience to be relevant and enjoyable: time, privacy and personalization.

Time

· The ultra-wealthy are often entrepreneurial individuals; 63% of all billionaires’ primary companies are privately held.

· 97% of billionaires worth US$10 billion or more have made part of all of their wealth themselves.

· 89% of all billionaires are married with families of their own.

· This makes time a precious commodity, if not a luxury in itself. And so a distinct need emerges to eliminate any obstacles which can be seen as inconvenient and time wasting in the pursuit of luxurious leisure.

Velaa Private Island, Maldives

Privacy

· From private islands to private jets, UHNW individuals tend to spend time with friends and loved ones behind closed doors.

· Billionaires tend to cluster in high density cities like Moscow, Hong Kong, and London, which could account for the need to be away from prying eyes.

Personalization

· This trend is being seen more and more by brands across the luxury market.

· In the fashion world, for instance, this can translate into looking behind the curtain, where you see how collections are formed before they hit the catwalk – then being able to purchase a highly personalized and unique item.

JetCraft

Globalization has created a greater awareness of what luxury is and where it can be found. It means that the ultra-wealthy now go that little bit further to seek-out truly extraordinary experiences – and then tailoring them to their tastes.

Seeking these personalized experiences makes a person unique, much more than owning material goods, not to mention that experiences will be different each time – which is exactly what the new generation of UHNW individuals are looking for.

ABOUT WEALTH-X

The global leader in wealth information and insight, Wealth-X partners with leading prestige brands across the financial services, luxury, not-for-profit and higher-education industries to fuel strategic decision-making in sales, marketing and compliance. Wealth-X boasts the world’s most extensive collection of hand curated dossiers on the ultra wealthy and produces unparalleled high net worth market research. Founded in 2010, with more than 200 staff across North America, Europe and Asia, Wealth-X works with over 500 clients providing them with unique data, analysis, and counsel to drive business success.

Spring 2017

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