HNW Impact Investing on the Rise {HNW Impact Investing on the Rise} – English

HNW Impact Investing on the Rise {HNW Impact Investing on the Rise} – English

One of the primary applications of wealth intelligence is to help organizations understand an individual’s complete wealth profile as more often, the philanthropic, investing, and spending habits of wealthy individuals are interrelated.  The recent rise of HNW impact investing is indicative of this trend and showcases how the wealthy make considerations of the heart and conscience when investing their money.

HNW impact investing is growing rapidly, with the Global Impact Investing Network reporting that assets under management (AUM) in impact-oriented causes jumped from $114B to $502B from 2014 to 2018. While this number still represents a very small share of total invested assets globally, there is a clear and growing desire for investment opportunities in this space among the wealthy. Traditional asset management professionals recognize this demand, with investment managers as prominent as Larry Fink of Black Rock acknowledging that there is an increasing public demand for companies to serve a social purpose.

While there is no universally agreed upon definition of HNW impact investing, there are a number of related trends that are often considered as falling within the realm of this practice. Considered broadly, impact investments are made to generate both positive change in specific social or environmental areas, as well as positive financial return.

HNW impact investing is still a maturing field and is largely dominated by foundations. Though there is some involvement from Limited Partners (LPs), the field currently lacks the full range of packaged solutions and financial instruments available to brokers and fund managers to offer to individual investors.

The rise in HNW impact investing is driven in part by a generational change in investment philosophy. A wide range of practitioners and observers have pointed out that younger investors are more interested in asset management strategies that align with their social values. These investors are affecting older investors and impacting corporate giving, which has grown as corporate social responsibility programs become more important.

HNW IMPACT INVESTING VENTURES

To help illustrate the growing significance and rapidly changing nature of this field, we took a look at the path of Triangle Impact Partners (TIP) – a new venture dedicated to engaging wealthy investors with a passion for social change.

TIP grew from a desire to do more than was possible with Donor Advised Funds (DAFs) and other similarly constructed funds, with the goal of providing an opportunity to leverage more patient capital to invest directly in social ventures. TIP’s mission is to provide a platform for investment with social ventures that have been vetted for both social impact and financial return. The funds on these platforms are generally smaller and typically comprise organizations that are engaged in efforts to achieve the UN sustainable development goals.

The plan for the platform is to provide a wide range of accessible funds that offer many of the benefits of DAFs, while also providing the variety and depth of other solutions (such as community investment funds). TIP is working to build partnerships with all the parties involved – from the direct impact organizations to investment managers. Their long-term roadmap involves engaging more investment advisors to create and streamline the process that would open impact fund access to a wider range of investors.

Currently, TIP is focusing on partnerships with social ventures to help them find ways to scale opportunities. As these relationships grow, additional intermediaries who own the conversations about potential investments will also be engaged.

NAVIGATING UNKNOWN RETURNS

While most wealthy investors have a desire for HNW impact investing, they currently lack many options that present them with a way to explore the space while maintaining an overall portfolio balance that fits with their long-term planning. As more opportunities become available, additional investors can enter the impact field and firms can learn more about how best to serve their needs.

A CALL FOR TRANSPARENCY

Especially in this growing space, transparency into impact and proof of financial clarity are essential for building investor trust. TIP sees the value in an impact reporting platform that reveals both returns as well as the tangible changes being driven by investments. Investors in a firm pursuing, for example, changes in local food chains will get updates on both returns and homes or farms serviced with that solution. Balancing returns with impact is key to engaging HNW impact investors for long-term sustainability, and organizations may set different thresholds for each.

While there are many questions about the details of how to set up, manage, and scale HNW impact investing opportunities, one thing is certain – impact investing is all but certain to expand. What remains to be seen is how the field will develop over the next decade. With firms like Triangle Impact Partners addressing the growing demand from investors to find opportunities that influence social change while gaining a reasonable return on investment, we will continue to see rapid growth in this space, leading to far more opportunities than have existed in the past.

Due Diligence Services for Non-Profit Organizations: Three Best Practices {Due Diligence Services for Non-Profit Organizations: Three Best Practices} – English

Due Diligence Services for Non-Profit Organizations: Three Best Practices {Due Diligence Services for Non-Profit Organizations: Three Best Practices} – English

In recent years, there has been a growing importance to establish and conduct regular due diligence practices within the non-profit sector. Just as donors often vet the organizations to which they are giving, non-profits use due diligence services to vet potential major donors to protect their organizations from risk and negative exposure. These risks include donations from financially illegitimate sources that lead to a clawback of funds as well as donations from, and association with, sources with poor reputations that damage an organization’s brand and reputation.

Given this risk environment, due diligence services are more relevant for non-profits today than ever before. Knowing your donor is as important as knowing your client or customer. The kind of enhanced due diligence that was once associated primarily with the financial services sector has expanded to many other areas – it is both relevant and important for any relationship that involves a significant transfer of funds, or public association between two parties.

For non-profit organizations to get the most from their fundraising efforts, they should adhere to the following best practices.

BEGIN BY SCOPING DILIGENCE EFFORTS PROPERLY.

There are several levels of diligence that can be run on a prospective donor and it’s important to know what each involves and understand the difference. A typical ‘enhanced’ due diligence process would include a search for adverse news, litigation history, and political exposure. In addition to performing this standard set of background checks, verification of source of wealth can be an important part of the process for most organizations. It is also wise to uncover whether the individual has a history of philanthropic donations. If they have, consider questioning the types of causes they are interested in, on what scale they have donated and how frequently. This will help to inform whether their history of philanthropic activity aligns with his or her source of wealth and net worth.

Tracking reputational and character background of donors should also be considered in cases where alignment between donor and recipient values is likely to be a matter of public attention. Has the potential donor been involved in any causes or organizations that might create problems for your organization? Is the donor associated with other wealthy individuals who raise concerns?

For instance, the American Museum of Natural History was recently forced to withdraw as the host site of an event honoring the president of Brazil, whose Amazon development policies had drawn objections. The Museum also faced the potential loss of additional donors.

UNDERSTAND YOUR ACCEPTABLE RISK.

Risk means different things to different people, and it’s important to accurately gauge what is acceptable for your organization. There are certain obvious red flags, such as illegal activity, but some kinds of political exposure may be more acceptable than others. Consider an individual that has amassed legitimate wealth from the tobacco industry or single use plastics. How does that impact your relationship with the individual?

It is also important to calibrate the level of diligence required. Screening services run the gamut from large scale bulk screenings to individual investigative services, which would typically only be used in case of very high-risk individuals, about whom an organization has no prior familiarity.

Wealth-X screenings fall in between these two extremes, with several unique strengths such as net worth and prior philanthropic activity reporting. Philanthropic history can provide important perspective on scale and frequency of giving, and net worth and source of wealth are an important framework for understanding philanthropic engagement.

POSITION YOUR ORGANIZATION FOR DOWNSIDE SCENARIOS.

Understand that no amount of research will uncover everything. Diligence efforts, no matter how thorough, will not always be sufficient. Nevertheless, due diligence services are becoming more important for both regulated and non-regulated environments. A clear and transparent process that can be easily communicated to regulators and the public is needed in case a concerning data point is uncovered that could be damaging to your organization. Regulators are concerned about proof of effort and process, and organizations need to be able to show that they’ve taken the proper measures even when a donor turns out to have broken a rule.

In a changing risk landscape, it has become more difficult to navigate the requirements of donor due diligence. Following a set of best practices will help your non-profit avoid potential pitfalls and maintain better relationships with both donors and the public.

Tailor Luxury Travel Experiences to the Highest Tiers of Wealth {Tailor Luxury Travel Experiences to the Highest Tiers of Wealth} – English

Tailor Luxury Travel Experiences to the Highest Tiers of Wealth {Tailor Luxury Travel Experiences to the Highest Tiers of Wealth} – English

Luxury brands often miss the opportunities to reach the highest echelon of travelers by serving down-market experiences. It’s the result of a troubling trend of mass market luxury, standardized luxury travel marketing appeals to both HNW and UHNW individuals, and the homogenization of luxury goods and services across these tiers of wealth.

The roots of these issues lie in a slew of societal, cultural and technological trends unfolding in recent years. The ubiquitous exposure of digital platforms like Instagram and the rise of the sharing economy are some of the most prominent contributors. However, collectively, these factors are manifold.

To efficiently target new customers, and to successfully retain them, the distinct expectations and needs of HNW and UHNW consumers ($1M-$29M v. $30M) must be considered both when creating the luxury travel experience itself, as well as the luxury travel marketing campaign. A luxury brand must understand a client’s level of wealth prior to designing travel experiences.

THE DEMOCRATIZATION OF LUXURY

Jaclyn Sienna India is owner and founder of the luxury travel agency Sienna Charles. She works with UHNW clients, designing unique travel experiences. She notes that luxury travel marketing has become the great equalizer. “Everyone is trying to make hotels and everything ‘luxury’ accessible… hotels are trying to appeal to everyone based on what is happening on Instagram. Now people who are not wealthy can afford ‘luxury’ vacations,” she observes.

Looking the part of luxury is notably easier than delivering such experiences in live settings. India travels 200 days per year, noting properties touting the term “luxury” often lack the service component. “So many people are opening hotels. They can always have the great architecture, the furniture… There are more [properties] that have them than don’t. However, you need to understand and get to know UHNW guests and service them accordingly. It’s the least amount of focus these days, yet experience takes precedence.”

SERVICE: THE MISSING LINK

Jaclyn Sienna India says “everyone is selling and not servicing”. She refers to the disconnect between improvements in hotel marketing imagery and luxury travel marketing, and actual service. “Luxury experiences need to be tailored and custom, [and on most occasions], nothing has been custom about their stay,” she goes on to explain.

Meanwhile, the sharing economy brings its own unique set of challenges. Companies among the likes of JetSmarter attempt to appeal to both the UHNW consumer and any traveler with $2-$3,000 worth of disposable income. India says, “Private memberships are mixing different demographics. A billionaire could sit next to someone who put [the charge] on his Amex. There’s a new resurgence of non-luxury companies trying to get into the luxury game. Airbnb is selling stays at $10,000-a-night villas and yet they don’t even check out their properties. Everyone is trying to get into experiences… [with many companies] at the end of the day, you call and speak to a robot and no service is attached to the experience. No one cares and no one thinks about what they want to achieve with their travel.”

UHNW luxury travel marketing and offerings must excel in service, personalized attention and exclusivity.

MASS MARKET LUXURY (HNW) VS. TOP TIER TRAVEL (UHNW)

Thus the question remains, what distinguishes UHNW travelers’ needs from those of their HNW counterparts? Service. Here are five ways to excel in serving individuals of wealth:

1. Remain Small.

Service is often sacrificed on the path for growth. Luxury hotel brand conglomerates exemplify these challenges. “Smaller lines like The Dorchester, with 8 properties, are getting it right. You lose a sense of who you are and why you started this when you grow and grow,” advises Jaclyn Sienna India. “Clients spend $100k to $1M for travel experiences so we meet them to find out who they are and what they love. You’re always face-to-face working with a professional for other industries, but travel is so anonymous and done online.”

2. Attend to Every Detail.

Sienna Charles has produced bespoke and truly luxurious experiences for adventurous UHNW travelers over the last decade, including building tents in Africa and Israel. In contrast, India underscores the luxury travel marketing strategies of hotels to construct glamping tents for imagery’s sake without the crucial attention to detail. She has personally witnessed a stateside West Coast example lacking indoor restrooms and featuring shared shower facilities.

Other examples, India shares, include “marketing ploys like spa and wellness”. “At the end of the day, they’re still using chemical products in their spas. They’re not really offering a wellness perspective.”

3. Deliver Bespoke Offerings and Experiences.

Carefully assess every partner, collaborator, product and service to guarantee truly luxurious offerings and experiences. This extends to the numerous luxury travel agencies delivering mass-marketed luxury travel. These companies provide automatic free amenities and upgrades on behalf of luxury brands, an expedient route to brand dilution and the loss of true luxury.

4. Make Privacy a Priority.

UHNW clientele expect and require privacy. The wealthiest consumers do not take pictures at resorts due to privacy concerns, and yet many properties pose the risk of other travelers’ documentation habits. These images and videos, in addition to location geotags, are risks that must be eliminated.

5. Market to a Single Tier (HNW or UHNW).

A blanket strategy to please HNW and UHNW clients will almost certainly undermine your goals to attract and retain new customers. Note key differences among the various tiers of wealth. For instance, most UHNW clients require the reassurance that they are the only individuals who can afford their special luxury travel experiences. As India describes, it has become increasingly difficult for the UHNW client to uncover these experiences at restaurants, in hotels and in the sky. Understand clients’ wealth levels and expectations; aim to exceed.

Marketing Private Aviation to the Highest Tiers of Wealth {Marketing Private Aviation to the Highest Tiers of Wealth} – English

Marketing Private Aviation to the Highest Tiers of Wealth {Marketing Private Aviation to the Highest Tiers of Wealth} – English

Businesses catering to high net worth (HNW) and ultra high net worth (UHNW) individuals offer increasingly exclusive products, services and experiences in light of the widespread and global democratization of luxury. Private aviation is one of several impacted industries, as private air travel becomes more accessible on a mass scale with the introduction of the sharing economy. Nevertheless, the finest luxury aviation firms tailor communications for clients at the highest tiers of wealth, combating mass market luxury.

ESCHEWING MASS MARKET LUXURY

Whereas some brands revitalize the meaning of luxury by way of exclusive stays at magnificent chateaus, in-person meetings with couture designers and similar gestures, a more discreet approach is required within private aviation.

The market segmentation process begins with a wealth screening and determining net worth, followed by the development of research-based marketing strategies intended to target the wealthiest clientele. When marketing to the HNW or UHNW individual, private aviation companies must first and foremost cater to this individual’s ever-increasing desire for privacy and exclusivity.

Take into consideration Global Jet Capital, a private aircraft leasing and lending solutions firm, which extends personalized financial solutions, business aviation expertise and more to a global client base of HNW and UHNW clientele. Chief Marketing Officer Andrew Farrant attributes flexibility, privacy, security, improved productivity and bespoke random access to aircraft as the foremost needs and desires of the HNW and UHNW individual.

“While this audience may share a certain level of wealth, assuming they share the same hopes, desires, wants and drivers, can lead marketers down the wrong path,” says Farrant. “The key to tapping into the mindset of any audience, including this one, is effective segmentation built on solid voice-of-customer research.”

KNOWING YOUR AUDIENCE

Foregoing flight-share services, true luxury private aviation businesses market private “lift as a service” flights and the ability to own. Security, convenience and time-efficiency are among the greatest motivators for purchasing aircraft, whether outright or via finance or lease. Meanwhile, time-efficiency remains the most desirable draw for “lift as a service.”

The bespoke flexibility of business aviation can compress into days a multi-city trip that would otherwise take weeks with commercial lift. “It’s the difference between spending time in airports and security lines and replacing it with time with loved ones – the things that are really important,” says Farrant.

In a market saturated with products and experiences for mass market consumption, only the most steadfast luxury firms will thrive, deploying highly-targeted communications, product differentiation and exceptional service.

ADDRESSING CONSUMER BEHAVIOR AND MARKET TRENDS

Catering to HNW and UHNW clients also requires a well-versed understanding of how they prefer to shop. Companies like Global Jet Capital offer a number of aircraft financing and leasing services, from progress payment financing and operating leases to equipment upgrade financing. Of note is that while cash dominates the private aircraft purchasing space, operating leases are the second highest in demand and a growing trend within private aviation.

The desire for operating leases emerged in response to the 2008 financial crisis. According to Farrant, operating leases allow clients to retain capital, protecting against swings in residual value and providing flexibility if the client wants a smaller or larger aircraft.

“We often find ourselves partnering with clients to ensure they have [a] full appreciation of their ability to protect capital, reduce residual value risk, manage tax liabilities, and gain aircraft disposition flexibility,” says Farrant. “Establishing a full appreciation of these issues can be the difference between a good and bad experience.”

Wealthy in China: The World’s Second Largest Market {Wealthy in China: The World’s Second Largest Market} – English

Wealthy in China: The World’s Second Largest Market {Wealthy in China: The World’s Second Largest Market} – English
Lujiazui Financial District in Shanghai

During 2019 Wealth-X completed a significant expansion to its dataset on the wealthy in China. We identified nearly 270,000 wealthy Chinese individuals, growing our total dataset by more than 22% and expanding our coverage in China nearly 18-fold.

The Wealth-X Analytics team is able to complement our flagship reports with a more detailed look at wealth in individual countries around the world. We began our country-specific wealth series earlier in this year with a look at the wealthy in Germany. From this significant data expansion, we are now taking a closer look at the wealthy in China, the world’s second largest wealth market behind the United States.

Via unprecedented wealth growth in recent years, China has overtaken Japan to emerge as the second largest wealth market.  The wealthy in China represent an estimated 2 million high net worth (HNW) and almost 27,000 ultra high net worth (UHNW) individuals in 2019 – though the market remains substantially smaller than the US.

Demonstrating their vast wealth, at a total of $4.2trn, the ultra wealthy in China maintain a significantly higher combined wealth than the 2 million individuals at the ‘lowest’ wealth tier.

METHODOLOGY FOR ‘THE WEALTHY IN CHINA’

Wealth-X proprietary data assets empower our clients with both a top-down and on-the-ground understanding of the wealthy.

To size and forecast the wealthy population and its combined wealth, Wealth-X Analytics leverages our Wealth and Investable Assets Model. This model produces statistically significant estimates for total private wealth and estimates the size of the population by level of wealth and investable assets for the world, for each of the top 75 economies, and for over 100 of the world’s major cities.

To profile the characteristics of the wealthy, we use our unique and proprietary Wealth-X Database, the world’s largest collection of records on wealthy individuals from around the globe. Each Wealth-X Dossier provides insights into an individual’s financial profile, career history, known associates, affiliations, family background, education, philanthropic endeavors, passions, hobbies, interests and much more.

Wealth-X partners with prestige brands across the financial services, luxury, not-for-profit, and higher-education sectors to fuel strategic decision-making in sales, marketing and compliance.

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