As the number of Ultra High Net Worth Individuals burgeon around the world, particularly in emerging markets – it is encouraging that this highly influential segment is so passionate about preserving wealth for the long term, especially considering their increasing commitment to philanthropy, says Standard Bank.
“Increasingly, we observe the wealth concerns of many of our clients in Africa is accompanied by a huge desire, reflected in many philanthropic projects and plans, aimed at driving more inclusive growth to improve the lives of all,” observes Phillip Faure, Head of Philanthropy for Standard Bank Wealth and Investment.
These and many more, data-driven insights into the world and concerns of the wealthy appear in the 2016 Wealth Report published by Knight Frank, Standard Bank Wealth and Investment’s global property consulting partner.
As Africa rises in importance as a wealth investment destination, 65% of wealth managers’ report that philanthropy has become more important to their clients. Driven mainly by a sense of duty, personal fulfilment and the desire to leave a legacy, Africa’s philanthropists are on the lookout for sustainable ways of using their wealth to solve social problems plaguing the continent.
“Leaving a legacy for broader society, beyond the family or the immediate business, is an increasing concern of Africa’s HNWIs – especially newer entrepreneurial money created in the digital age,” adds Faure.
Mirroring global trends, African philanthropists are becoming increasingly sophisticated in how they structure their giving and investing, with social impact emerging as a key dimension along with risk and return in every investment decision. Standard Bank Wealth and Investment’s Wealth Quotient helps contextualise how UHNWIs can manage, grow and protect their wealth. This provides support to clients through each life stage, giving shape to the clients’ passions and purpose to their wealth.
Preserving wealth over time or using wealth to leave sustainable social legacies, “requires a mind-set far-removed from the often highly entrepreneurial instincts of many of Africa’s HNWIs,” explains Faure.
For example, externalising half of your wealth in safe haven investments generating up to five percent premium per annum over 30 years – compared with, say, a 25% return on a two-year infrastructure project in Tanzania – is difficult for many of the continent’s HNWIs to accept.
Utilising the fourth, quadrant of the Wealth Quotient, Standard Bank Wealth and Investment introduces the capabilities associated with leaving a legacy. By helping high net worth individuals define their aspirations and goals, facilitating the necessary education and preparation for future generations, Standard Bank’s insight and guidance ensure that a tradition of philanthropic giving is built by high net worth individuals.
At the same time, there are considerable legal and tax issues relating to cross-border giving that require in-depth specialist knowledge, as well as a landscape of causes and issues that is complex and vast – necessitating the need for comprehensive advice.
Whether giving back through signature projects, incubation or quasi-commercial models, philanthropists are becoming increasingly strategic and formal philanthropic structures, such as trusts and foundations have structuring implications would also require ongoing financial management and reporting.
“Cross-border regulatory complexity can hinder the development of global philanthropy services. We have responded to increasingly complex cross-border transactions and a demand for value from UHNWIs grappling with challenged and rapidly changing domestic market conditions on the continent by employing global specialists able to assist the continent’s UHNWI’s achieve their goals through their investments,” added Faure.