The money matters of the super wealthy topped the agenda at the recently held Elite Wealth Conference. The event, which took place virtually, offered brokers and their clients a fascinating look at the lifestyle of the wealthy through an insurance lens.
Christelle Colman, MD of Elite Risk Acceptances, a specialist underwriter, host of the Elite Wealth Conference, and wholly owned subsidiary of Old Mutual Insure, said that COVID-19 has impacted the habits of the super-rich.
“The pandemic increased the coffers of the wealthy, which effectively unleashed pent-up demand, resulting in a spending spree by the rich on fine wine and whiskey, diamonds, classic cars and other alternative asset classes,” said Colman.
Mohammed Yaseen Nalla, founder of Magic Markets and a CFA Charter holder, who provided insights into how SA stacks up in the global wealth stakes, said that globally, over 50% of wealthy people saw their wealth either stay the same, or increase, during 2020.
“The wealthy who made money during the pandemic did so because of global exposure,” said Nalla. “When building wealth, take a long-term view, ride out cycles and remember that it is about multi-generational wealth creation.”
Soul Abraham, Old Mutual Insure’s Chief Executive: Retail, noted the local trends that the business is seeing in the upper end of the market, and how this is creating opportunities for brokers to add value.
“The South African luxury sector creates various opportunities for the economy to grow while addressing unique challenges that plague SA’s wealthy when protecting their wealth against risks,” said Abraham. “We see that the ultra-rich tend to underinsure when it comes to luxury items and over-insure against low-risk threats. This can be especially devastating for those with sentimental investments such as jewellery, art, classic cars or wine.”
To weigh-in on the topic of wine, international guest speakers from London-based Cult Wines gave a fascinating account of the pleasures, the pitfalls and the opportunity in this alternative asset class.
“Fine wine, as measured by the Liv-ex 1000 index, posted a healthy 2% growth in 2020,” said Marcus Allen, Director of Business Development at Cult Wines. “With a long-term compound annual growth rate at close to 8% (going back to 2004), growth could accelerate as vaccine rollouts allow major economies to reopen.”
He adds that, when looking over the longer term, fine wine’s recent stability in the face of the Coronavirus pandemic will likely raise its credentials as an important component in an investment portfolio.
“The main criteria used to assess a wine’s investment potential are a producer’s brand prestige and history, vintage quality, volume produced, market liquidity and longevity. Wine critic scores are also an important variable to assess investment potential.”
Colman added to this saying that for some, wine is a long-term investment, while others like to consume their wine. “Either way, and in light of the fact that wine continues to fetch high prices, it is best to take steps to preserve both the taste and value by insuring properly against risks.”
Shelley Walters, Founder of The Sales Counsel, spoke about the importance of cultivating connections in a virtual world. She also gave the brokers in the audience powerful tips on how they can better close deals and how to maximise the opportunity offered by the “new normal” of doing business online.
“To maximise your engagement with clients online, make sure that you get the basics right. When you start an online meeting, confirm that your client is still on the same page as you with regards to the time committed for the meeting. Remember that in today’s world where people are exhausted, they go from one virtual meeting to the next, with almost no time between. Checking in with your client is critical to get to your message quicker. Also make sure you follow up with a clear and succinct email communication following the meeting,” said Walters.
Elite Risk Acceptances also launched a fantastic broker sales training tool, specifically designed for how to sell in the digital space, in partnership with Walters.
“As the numbers of the super-rich rise, wealthy individuals should carefully consider their unique risks and remember that it pays to insure collectibles and assets,” concluded Colman.