A global, nomadic approach to personal and professional life is a key factor to the success of millionaires around the world, according to a new research report released today by RBC Wealth Management and The Economist Intelligence Unit (EIU).
Quality of life and family needs were the top considerations for millionaires who left their birth country in search of success, rated as important by 88% and 79% respectively, while business interests were a key factor for two-thirds (67%).
The report, Wealth Through the Prism of Culture and Mobility, investigates the investment, wealth transfer and charitable-giving behaviours of individuals who live, work, or spend more than half their time outside their country of birth and have investable assets of at least US$1 million. Focusing on this group of internationally mobile wealthy individuals (IMWIs), the report highlights how the global paths of the wealthy influence their key wealth decisions.
“As globalized economies converge, high net worth individuals have increasingly international footprints, with personal and professional interests in multiple geographies,” says George Lewis, group head, RBC Wealth Management & Insurance. “Our experience working with high net worth clients around the world shows that their success is often strongly influenced by a global perspective about building, protecting and ultimately transferring wealth to future generations.”
According to the survey, IMWIs are generally self-made, having earned their wealth as professionals (29%), entrepreneurs (17%) or as executives of public organizations (12%). Less than a third (30%) grew up with high net worth parents.
Younger millionaires (aged 40 and under) generated wealth through more diverse means, with only 17% earning wealth as professionals, compared to 26% of those aged 41-to-50 group and 41% of those older than 50. Those born in Asia-Pacific generated wealth at a younger age, with almost half (46%) aged 40 and under, compared to 19% of those from other regions.
A global approach to income and investing
According to the survey, most IMWIs (60%) generate the majority of their income from the country they now call home. In turn, almost half (48%) invest the majority of their income back into their country of residence, while nearly a third (32%) invest primarily in their country of origin. IMWIs take a similarly global approach when it comes to what they invest in, with global equities favoured by over a third (36%), compared to just a quarter (25%) of millionaires who have stayed in their home country.
Real estate the top asset class
Real estate leads the list of preferred asset classes for IMWIs, with over half (53%) having it as a high or very high proportion of their portfolio. Mobile millionaires are also more likely to have significant investments in precious metals compared to their home-based wealthy peers (21% versus 13%).
Wealth transfer and charitable giving
The most common approach to wealth transfer is to leave enough to their family so they are comfortable but still have to work for a living (33%). However, unique differences exist based on where respondents were born. Those from Asia-Pacific are the most likely to leave all their assets to their families, with 41% planning to do so, compared to just over a quarter (27%) of IMWIs from other regions. Meanwhile, North Americans are the most likely to leave assets to charity, with 29% planning significant donations compared to just 11% of IMWIs from other markets.
Respondents in North America prefer to give where they live, with three-quarters (76%) giving to local causes, while those in the Asia-Pacific region are more focused on their birth countries, with 48% giving to causes back at home, 38% to causes where they reside and 13% to causes in other countries.
Children’s charities receive 27% of total donations from respondents followed by health, education and poverty reduction causes, which attract 13, 12 and 11% of donations respectively.