“Mobility Mindset”: an Emerging Route to Value
Ever wondered how wealthy people maintain and even grow their wealth; how they manage to weather the economic impact of Covid and are dealing with surging inflation, the Conflict in Ukraine; a situation known as global “permacrisis”? Here’s a clue … As well as looking for safe havens in the form of real estate and capital appreciation, an emerging state of mind appears not to be simply cash, or crypto, or assets per se. The new route emerging is mobility.
Wealth can be a controversial subject, as the spotlight often falls on the concentration of wealth in the super wealthy. Wealth distribution issues aside, the Ultra High Net Worth Individual (UHNWI) rarely reaches such a position by accident; it takes a lifetime of hard work, taking risk, and making highly strategic decisions. The mindset and the range of approaches being taken by the UHNWI can also provide useful pointers for everyone considering how to chart their own route to financial value.
I recently read the annual Wealth Report 2023 from Knight Frank, which stands out as it is based on global data, and on an annual survey of UHNWIs and their Advisors. The report draws several insights from the permacrisis of 2022 and future intent for 2023, among them:
· The wealth held by UHNWIs declined by 10% in USD terms in 2022.
· Investors are targeting capital growth, capital preservation, and income generation for 2023.
· Safe havens will appeal in the form of residential and commercial property.
On face value, real estate as an established route to value is not a surprise. However, within the Knight Frank findings, luxury assets, in particular, Art were also strong performers with notable blue-chip sales in 2022 and 59% of UHNWIs expressing an intent to invest in Art in 2023. It is interesting that such investments also fit with the emerging move towards mobility as a strategy for wealth.
Covid and the rise of the digital nomad, coupled with attractive tax rates and incentives for global relocation and residency, contributed to a growing interest in mobility, which is set to increase. Knight Frank refer to this as “the tip of the iceberg”:
“… The 13% of UHNWIs who are planning to acquire a second passport or citizenship is the tip of the iceberg. The boom in so-called digital nomads is only just starting — promising disruption to outbound countries, destination markets, tax systems, residential rental demand and office requirements…”.
This opportunity is also not lost on Jarrett Preston, entrepreneur, world-class trader and CEO of Idoneus. In his recent Wall Street Bestseller Billions Under Pressure, Jarrett shares insights through the lens of years of experience facilitating value transfer across the globe for wealthy individuals and their families. His view on value goes beyond cash and describes assets as including “… property, diamonds, art and gold, but also time, information and relationships …”. He makes several points based on his experiences, among them that “Inaccessible value is of no value at all” leading to a conclusion that “diversification is no longer enough; mobility is required”.
It is no surprise that he is spearheading the digital business, Idoneus, whose mission is described as “to provide individuals with more freedom of movement and options, while providing extraordinary value and mobility through a border-less economy for luxury assets, goods and services”.
I am struck by the implications of all of this. The prevailing commentary across news channels is urging people to take less risk and “get your head down”. Holders of significant wealth, whilst seeking safe havens and investing in real estate, are also adding an element of a different approach to their lives in terms of mobility, which can also be enabled by new digital means of value transfer. Clearly the world of “permacrisis” is not going away. Current issues will be replaced with other challenges of our Age, as for example we wake up to the report from Forbes that 4 July was the hottest year in 100,000 years.
What is worth thinking deeply about, in a world of uncertainty, is a shift of mindset towards mobility of assets and lifestyle and adopting digital technology to transfer value, as an additional way to stand strong in the face of crisis.
I call this “Mobility Mindset” and I expect to see it grow.
