The Changing Behaviours of the HNWI

 by Winston Chesterfield, Founder, Barton.

Has your the focus of your client work changed over the past year as a result of the pandemic?

Some of the work has definitely changed. Lots of clients are looking to the future beyond the pandemic, trying to understand how attitudes may change and whether their business is exposed to headwinds, so strategy and planning has been big. Clients have been looking to a digital future and a more international future, despite the global pandemic. We have had clients ask about where the growth is going to come from, which archetypes of wealthy consumer are going to be the most relevant, whether wealthy individuals will be returning to spending in their category after the pandemic and whether there will be any long term impact on their needs or preferences, particularly from the lockdown.

Is there a particular sector that has become more prevalent?

There’s not really one sector that has become more prevalent. We’ve done work across many different luxury categories, even travel which has largely been in shutdown since last year. We have been impressed by how many brands have been coming to us, and have been really active in planning for the post-pandemic era. We’ve seen a lot of innovation as well, and a greater openness to evolution and new ideas.

How have you seen the pandemic changed the behaviours of HNWIs?

There has definitely been a vindication of HNWIs recent focus on their personal health. The pandemic has shown to them the importance of keeping fit and healthy, and many HNWIs had already been keen on looking after their bodies and mind with the right diet, regulation of alcohol consumption and fitness classes. So this has made them even more determined to pursue a healthy lifestyle going forward.

However, we have seen a lot of wealthy people feel frustrated by the lockdowns and closure of society. They value time as a precious resource and many of them feel that it has been wasted. They have numbed the pain of not being able to go to their club or meet friends for dinner or go travelling with some increased e-commerce spending on personal luxury goods, but their digital love affair has limits and they are most anxious to get back to normality.

Ensuring they have an insurance policy, should another pandemic arise and lockdowns occur again, is a definite change. Previously we had seen a big shift in retiring or retired HNWIs consider a move to a downsized property in the city for the culture and entertainment, but now they see the difficulty in only having one residential option and so bigger and second homes are a big trend amongst them, particularly in more remote areas.

When it comes to luxury consumption and willingness to consume, fortunately, the pandemic seems to have had less of a negative impact. Yes, some luxury sectors have been cratered by the imposition of lockdowns, but the appetite is there and the global audience of the wealthy has grown and pent up demand is there.

In terms of HNWIs growth forecasts, where can you see affluence emerging?

The strongest growth will continue to be in North America and Asia-Pacific. These are the most dynamic wealth-creating regions in the world and we expect them to emerge strongest from the pandemic. Europe has been battered by the pandemic and has been through a lot of other macro-events in recent times, such as Brexit, that will also leave scars. Their wealthy populations are largely stagnant – barely growing at all – and we expect a low growth rate for the immediate years ahead. The UK may be one to watch as it pursues its own agenda in the world, with many business CEOs citing that it is going to be an attractive place to invest. We will have to see, but increased investment tends to breed affluence growth, and also an increase in the number of global HNWIs who wish to base themselves there. Albeit, this will be tempered by tax increases (which many developed countries will have to adopt) to pay for the protections against the pandemic.