Surveys
HNW Individuals Buy Replica Luxury Goods, Fret About Robbery
These stories also shed light on an important role that advisors should take, particularly with younger clients who might not be as streetwise as they should be. Advisors need to get this right, of course, and not patronise clients by telling them what might be obvious.
Research from UK insurance firm Ecclesiastical
Insurance shows that just over half (51 per cent) of UK high
net worth individuals deliberately buy replica luxury goods to
protect genuine possessions from thieves.
The large majority (83 per cent) of those who knowingly purchased
replicas say that they did so to protect valued collections. This
ploy is well known, with celebrity figure Kim Kardashian
admitting in 2021 that nearly five years after a robbery at
gunpoint she wears “borrowed” and “fake” jewellery, adding, “no
expensive items ever come into my home.”
The fieldwork for the study was conducted from 9 to 27 July 2023
amongst 250 UK high net worth individuals with an income of at
least £200,000 ($242,547) per annum or liquid assets of at least
£1 million. The data showed that HNW individuals collecting
paintings are most likely to knowingly buy replicas (38 per
cent). This is notable given that over three quarters (77 per
cent) of them say they have invested in paintings, the second
most popular collection type.
The findings come at a time when, for a variety of reasons, crime
in certain cities around the world – such as London and New
York – has risen. As the Kardashian episode shows, stories
of robberies and burglaries of the super-rich add to fears about
wearing expensive jewellery in public, for example. In London, in
April 2021, the boxer Amir Khan had a £70,000 watch stolen at
gunpoint. And footballer Raheem Sterling was the victim of an
armed robbery in which burglars stole £300,000 in jewellery and
watches in December 2022.
This news service’s editor recently
mused on the problems of theft in major cities, and the sort
of advice wealth managers should give clients.
This rise of replica buying comes at a time of increased
burglaries. According to the Office for National Statistics,
there were 75,265 robbery offences and 1,724,361 theft offences
reported to the police in England and Wales between March 2022 to
March 2023. This is an increase of 8,937 reported robberies on
the previous year and 25,111 more than the 20-year-low in the
year between 2014 and 2015.
Handbags and jewels
The next most common knowing replica purchases are handbags (35
per cent). Almost a quarter (23 per cent) of jewellery
collectors, 78 per cent of HNW individuals, have deliberately
bought replicas. Meanwhile, over a quarter (28 per cent) of watch
collectors, three quarters of high net worth individuals, have
knowingly purchased a replica.
“We would encourage those who are not regularly getting their
collections valued to do so. While it is a terrible experience to
have your valuables stolen or damaged, the purpose of insurance
is, partly, to recoup the value of what you have lost,” Dr James
Lindow, underwriting director for art and private clients at
Ecclesiastical, said. “Up-to-date insurance, including annual
valuations, combined with robust security measures, is the most
effective means of protecting your valuables. This gives you
peace of mind and the freedom to leave items at home or, where
appropriate, wear or carry them.”
Many HNW individuals know what their collections are worth. More
than half (61 per cent) have at least one collection appraised
annually, with almost a quarter (24 per cent) having a collection
appraised more often than once per year. The rise of social media
may have a role to play in the rise of burglaries and thefts.
Almost three quarters (72 per cent) of HNW people like to share
their purchases with their friends and family on social media,
which increases the risk of theft.