Canada-headquartered Canaccord Genuity Wealth Management, which has significant operations in the UK and Channel Islands, surveyed over 1,000 UK residents to gauge their outlook on the future of their finances.

The majority of high net worth individuals (HNWIs) are confident that their long-term financial future will be fruitful, but the outlook for future generations is bleak, according to new research by Canaccord Genuity Wealth Management.

Some 93 per cent of HNWIs included in a sample of 1,035 UK residents surveyed by YouGov, commissioned by Cannacord to conduct the research, said they were confident about their long-term financial prospects. Furthermore, 82 per cent of wealthy Millennials and HENRYs (high earners, not rich yet) were assured their futures would be prosperous.

Regarding their financial plan, 89 per cent of HNWIs, 74 per cent of HENRYs and 70 per cent of Millennials thought it would meet their wealth goal. 

David Goodfellow, head of UK financial planning at Canaccord Genuity Wealth Management, said: “The overall high level of confidence about wealth, against a backdrop of economic and political uncertainty, is really heartening.”

However, this confidence was not reflected in all aspects of the respondents’ wealth. 

Only 18 per cent of HNWIs who are still working feel they will enjoy a better standard of living when retired, with 27 per cent believing they will be worse off. HENRYs and Millennials, perhaps unsurprisingly, were even less optimistic, as 45 per cent and 40 per cent, respectively, think they will be worse off once retired. 

Gazing into the crystal ball
When asked about future generations’ wealth, the tracker indicated that where confidence is concerned, the glass is half empty. 

HENRYs were the most pessimistic, with 50 per cent anticipating that future generations will have a worse quality of life than they currently do; 43 per cent of Millennials and 44 per cent of HNWIs echoed this. 

Social care and care home-funding was cited by respondents as the biggest risk of wealth erosion. Over a quarter, or 26 per cent, of HNWIs said tax implications would deliver the hardest blow to future wealth followed by living to be elderly (over 85), cited by 18 per cent of respondents. 

HENRYs and Millennials, on the other hand, thought macro-economic factors - such as Brexit, for example – would outweigh taxation. 

When questioned on the various investment vehicles would contribute most to long-term wealth, the “bricks and mortar” vs pensions debate was played out. 

Among HNWIs, property stood out as the clear winner, with 32 per cent of the cohort thinking it would play the most crucial role in their portfolios when building long-term wealth. In comparison, just 18 per cent overall said their pensions would do the same. 

Property was also the main choice among Millennials (32 per cent), followed by pensions (29 per cent) and, surprisingly, cash accounts (11 per cent). 

Canaccord’s Goodfellow flagged “a few areas of concern”. In particular, he pointed to one of the survey’s findings which showed that over a fifth of HNWIs are now “DIY investing” via online investment platforms. Still, it appears that wealth managers shouldn’t yet fear for their jobs, as 22 per cent of the HENRY cohort were found to be as likely to invest with a money manager as through an online platform. 

Goodfellow also suggested that a misunderstanding of the tax reliefs associated with pensions could be fuelling low expectations.

“Feelings about pensions amongst HNWIs are also interesting - despite the fact that equities have performed well, negative perceptions about pensions still prevail,” he said. “In my opinion, people do not understand the benefits of tax relief around pensions and are put off by the government’s constant tinkering. This all contributes to the low expectations HNWIs have about their standard of living in retirement."