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Britain's millionaires: learning to be more self-reliant

A staff reporter

15 February 2005

Britain's millionaires are changing their investment habits and becoming more self-reliant in their decisions, according to a new report by Tulip, the financial research firm. The report, entitled "Britain's Millionaires — The Powerhouse of Private Investment", found that many millionaires are diversifying their investments, taking their own initiatives when investing and relying less on wealth managers. "Led by rising property prices, millionaires have taken liquid assets and put them into property. This has largely been done on their own initiative and not on the advice of investment advisers of any kind," the report said. Tulip said most millionaires felt that their decisions on property investment were correct and that "they can dispense with financial advisers, and many — well over half — plan to become self-reliant rather than adviser-reliant". Tulip believes the biggest beneficiaries of the move towards self-reliant investment decisions will be providers of financial information. "The clear winner is the press: the financial pages of newspapers and the financial magazines," the report said. Financial advisers will have to change or improve their services to match the needs of millionaires if they are to hold on to their rich clients, the report argued. " are becoming more self-reliant, more dependent on themselves rather than advisers for investment decisions. And a successful move into property has made many of them more self-confident — though this may change if the property bubble bursts! Financial advisers of all kinds need to change the services they offer to take account of the new sources of information, the new channels of investment and the new kinds of investment available to millionaires. This is a great opportunity for the alert adviser and a major threat to the lazy adviser," John Clemens, Tulip's managing partner told Private Client Management. Unequal distribution The report also looked at the assets owned by Britain's millionaires and how these are distributed. Unsurprisingly, Tulip found that wealth is heavily concentrated in Britain, with the wealthiest one per cent owning 65 per cent of all liquid assets, equivalent to more than £640bn of the £1trn liquid assets privately owned in Britain (see table two). The country's 150,000 millionaires make up about a third of Britain's wealthiest one per cent of the population. Tulip found that Britain's millionaires own £520bn in liquid assets, 80 per cent of the liquid wealth owned by the top one per cent in Britain. Just under half by value (£229bn, 44 per cent) is invested in company shares, either directly or through unit trusts or open-ended investment companies. As the London stock market has fallen by more than 20 per cent in value since March, millionaires are now suffering a six-month loss on their equity investments of more than £45bn, in addition to their earlier losses since the end of the bull market As expected, the research found that the country's millionaires are quite diversified in their investments. "They are no doubt showing a profit on the £66bn they have invested in property, and are probably not losing on their gilts and bonds holdings of £63bn as only a small proportion is held in bond or gilts funds. In addition, they hold over ten per cent of their liquid assets in cash, in a mix of savings and money market accounts." The future: caution prevails Tulip also found that Britain's millionaires are likely to be cautious in their investment decisions over the next 12 months. Tulip asked the millionaires surveyed which investments they expected to add during the next 12 months: 40 per cent said none, 32 per cent said shares, 16 per cent said property and 15 per cent said cash. The research also revealed which investments millionaires expect to reduce or sell entirely within the next 12 months: 80 per cent said none, ten per cent said shares.