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UK High Net Worth confidence drops below 2021 levels

David Barks Senior Director 29/03/2022

The start of the war in Ukraine damages perceptions of the global economy but millionaires remain confident in their personal investment strategies

Millionaires are the owners of a large proportion of invested wealth. Understanding their perceptions can guide wealth managers communications and strategies.

UK High Net Worth (HNW) confidence has dipped to 115 in Q1 2022, a drop of nine points from Q4 2021. However, millionaires remain positive about their personal circumstances despite the war in Ukraine and the associated convulsions working their way through markets.

Very High Net Worth’s (VHNW’s) in particular are more bullish on the global economy. This has led to a rise in their confidence from 115 to 132, boosted by very positive perceptions of their own financial positions. Their experiences of the COVID-19 pandemic have typically been financially positive for them, as they stayed invested and benefited from rebounding markets. For instance, the FTSE250 recovered steadily through the second half of 2020 and throughout 2021. With recent falls far less than the crash at the start of the pandemic in early 2020 many have seen the markets as an opportunity to invest.

In comparison, HNW confidence has fallen to 105 from a bullish 125 in Q4 2021. Whilst they remain positive overall their thoughts about the global economy have become pessimistic, much as they did at the start of the pandemic.

Interestingly, under 55s remain more confident than their older peers, particularly about their personal investments. This is consistent with previous quarters but shows how older clients may need more reassurance about their pensions and retirement income through global shocks.

Millionaires currently see the biggest investment risk as increased inflation, but concerns around equity market volatility has also risen by three points since Q4 2021 (35% cf. 32%). How equity markets are affected by the likely protracted fallout from Western sanctions on Russia remains to be seen. But wealth managers will again be seen to be earning their fees as the wealthy seek to shield themselves from further turmoil and divest Russian assets where possible.

The highest earners (£250k+) are however more pessimistic than those earning £100k-£250k. Luxury brands may note a short-term hold on big ticket items as the biggest spenders take a pause to see how the current crisis evolves and resolves.

The Savanta HNW confidence index uses Savanta’s MillionaireVue Omnibus, a representative survey UK’s millionaire population of n=491 conducted in the UK in February 2022.

Savanta’s MillionaireVue is a quarterly omnibus with c. 500 HNWI’s in each of UK, US, and China. For more information please click here.

To find out more about the work our wealth & luxury team do, or to speak to one of our wealth specialists, please click here.

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