The rise of the Centi-Millionaire

Video transcript

1. I recently went through The Centi-Millionaire Report produced by Henley & Partners in collaboration with New World Wealth. Firstly, to start with who are centi-millionaires and where are they based?

We often hear a lot about billionaires globally. There are 3,000 of them. But we often forget about centi-millionaires. Centi-millionaires are individuals with investible assets of over USD 100 million. Most of them are primarily based in the US, about 40% of them. It is predicted though that Asia is going to experience 57% growth of centi-millionaires, which is twice of that of Europe and the US. Particularly countries like Vietnam, India, and Mauritius are going to be leading the charts. So the world indeed is moving east. A lot of the private wealth is expected to grow, particularly in this part of the world. It is very important to track centi-millionaires because they give you a good assessment of the private wealth. And a lot of economists argue that private wealth is a better indicator of the financial health of a jurisdiction than GDP is, as GDP tends to be a bit of a static measure, and it forgets about real estate and equity transactions.

2. What are the key wealth management trends you see amongst centi-millionaires?

Michael, so the private wealth worldwide is growing, and we see that trickle down into private markets. The private markets have grown three times in the last 10 years. Entrepreneurs with good valuation, they're keeping their companies (private) longer. And we do see, even though it's not a big part or a portion of the equity markets, private markets are likely to grow at the back of the investments that these centi-millionaires would be making. The second piece is family offices. They've become a global financial phenomenon, particularly after the 2008 financial crisis. There are about 10,000 family offices globally. There are about 1,500 family offices in Singapore. And with the rapidly changing regulatory and investment landscape, I believe family offices have become more important than ever. The third piece where we see is prime real estate in places like Palm Beach and the Hamptons in the US. We're looking at French and the Italian Riviera. We're looking at Verbier and Davos in Switzerland, the Lake Como area, Algarve in Portugal. These places tend to be extremely sought after for real estate acquisitions for a lot of centi-millionaires globally. The other piece that we see is there is an increasing interest to hedge against the US dollar by investing in Singapore Dollar, the Norwegian Krone, or investing in the Swiss Francs. We're also seeing a lot of trends around impact investing. Centi-millionaires are keen to invest in places like food security, energy. We're also seeing the rise of alternative investments, particularly fine art. A Monet or a Klimt can fetch you up to USD 50 million. But we're also seeing the emergence of Asian art, particularly if you look at the Ming Dynasty pottery, or if you look at the Himalayan art. In addition to that, there has also been rise of interest around vintage cars. If you look at the 1992 McLaren F1, it goes for around USD 20 million US dollars now, which is 20 times more than its original price adjusted to inflation. And finally, the most important, centi-millionaires are very keen to get an alternative residency or a citizenship as a means to hedge their overall sovereign risk.

3. Why are centi-millionaires around the world considering alternative citizenship or residency and what are some of the major destinations they chose?

For centi-millionaires, if they are exposed to only a single governance, a single taxation structure, a single legal infrastructure, they're spreading themselves too thin. And as a result of that, they want exposure to different markets, whether that's Asia or the Middle East. Adding sovereign diversity in their portfolio has become extremely critical, more than ever, particularly in the wake of what we've seen recently with Silicon Valley Bank and Signature Bank in the US. American entrepreneurs are very keen to look at Asia as a place to invest. The second piece is, particularly for wealthy entrepreneurs in emerging and developing markets, it could be a great opportunity to transcend beyond the restrictions they currently have when it comes to mobility, access to healthcare and education. It could also be driven by lifestyle reasons at times. And, finally, I do believe the digital asset entrepreneurs are where we're going to see a lot of growth of wealth, particularly, looking at jurisdictions which are overall friendly to digital assets. Places like Singapore and Dubai and Mauritius are up and coming. These are the real places where the world is converging when it comes to wealth preservation in general. And that is at the back of the robust banking and wealth preservation infrastructure these places offer. Where are these centi-millionaires going? So, places like Austria and Malta, it is possible for you to acquire a citizenship through an economic contribution over two to three years. Centi-millionaires are also looking at residency options particularly in Europe and places like Spain and Italy. Thailand has become extremely interesting. Singapore and Dubai, again, they have options where people could invest and potentially get a residency at the back of it. I would say these are the most sought after places where we see wealthy individuals looking at alternative residence or citizenship.

4. How can governments attract centi-millionaires?

The first step is to have a structured systematic program, which caters to residents and citizenship by investment, so centi-millionaires have an avenue to approach in a structured way. The second piece is to create a conducive fiscal climate where entrepreneurs can preserve their wealth, and at the same time, it is conducive for their startups to grow. Entrepreneurs really prefer places where they can overcome talent shortages by hiring foreign talent. So, the ability to overcome talent shortages remains quite critical for these entrepreneurs to thrive. And the final piece would be governments which are going to take a proactive stance, particularly within the digital asset ecosystem or Web 3.0. They're likely to attract this new generation of entrepreneurs invested in that industry. The way we saw economic prosperity in Singapore at the back of industrial revolution in the 1970s which was pivoted to a service-based economy, I do believe a lot of countries can generate a relative level of economic prosperity at the back of getting involved in the Web 3.0 revolution.

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