|
CANADA
Well-To-Do Not Doing
That Well
High Income North Americans have the highest
anxiety levels of the well-to-do. A survey by Roper Starch for American
Express found that Americans, followed by Australians, Japanese and
Canadians in that order, are the most anxious among the well-heeled.
Two-thirds of Americans who make more than $60,000 USD a year say they're
stressed out several times a year. The syndrome has been
tagged "Affluenza" by Millwaukee-based therapist Jessie O'Neill,
who said the rich can have trouble tolerating frustration and may suffer
from a false sense of entitlement. - Canadian
Press Nov 2003
Inside the Minds of
Millionaires
When Canada's wealthy go on vacation, they head
for a Four Seasons hotel. When they shop for wheels, they look first at
German luxury cars. And you're far more likely to find a millionaire on the
golf course than the squash courts.
Canada's rich like the good things in life -- and
they've earned the right to enjoy them. Most amassed their fortunes by
working hard, investing shrewdly and saving scrupulously, according to
research by the Taddingstone Consulting Group. The Toronto-based consulting
firm with a specialty in financial services conducted interviews and surveys
with hundreds of Canadian millionaires last year. The result is one of the
most complete pictures available of how the nation's rich work, play, spend
and invest--and it has been made available exclusively to the National Post.
Canadian millionaires are typically senior
executives or entrepreneurs, or retired. They make good salaries -- about
half claim household incomes of at least $250,000 a year -- but they're also
vigilant about paying down debt. Three out of four have paid off the
mortgage.
High incomes, low debt, lots of money to invest:
Canadian millionaires are the dream customers for banks and other financial
institutions. But the wealthy, it seems, don't feel they're getting red
carpet treatment. As revealed in an exclusive Post panel discussion with
eight Canadian millionaires, the rich have the same gripes about bank
service as everybody else. They're irritated by the confusing number of fees
and charges. They complain their bankers aren't knowledgeable enough, are
too junior and too difficult to get in touch with. They even prefer to buy
mutual funds managed by an independent company than a bank.
But the rich constitute a market the banks cannot
ignore, especially as they try to get an increasing portion of revenue from
wealth management and investing services. Of the $1.7-trillion in
discretionary wealth Canadians now hold, nearly half is in the hands of
about 177,000 households. "Two-thirds of millionaires are less than
highly satisfied with the investment services they're consuming," says
Doug Trott, president of Taddingstone. "There's a lot of room for
improvement."
A few financial institutions have earned the
business, if not the respect, of the super-rich. RBC Dominion Securities,
the full-service stock brokerage owned by Royal Bank, boasts a
disproportionate share of the wealthy customers. The merged
Toronto-Dominion/Canada Trust is the most popular bank among the millionaire
set. And growing numbers are turning to independent investment counselling
firms, such as Phillips, Hager & North.
Taddingstone's research unearthed a wealth of
other details. Inside, we'll pull back the velvet curtain and show you how
the other half lives. We'll tell you where the rich go for financial advice,
and why. You will find out how they spend their money -- which cars they
buy, what kind of houses they own, which sports they follow. And we profile
some of the people who serve this lucrative market. You'll find them on the
following pages -- and at the Four Seasons and the local golf club. -
National
Post 2001
How to pamper a
millionaire
Are you worth enough to have this woman as your money manager?
Early in her career as a professional money
manager, Ellen Kratzer received an unusual package. It arrived
by messenger, and it came from the jeweller at New York's grand Helmsley
Palace Hotel (now the New York Palace).
"I was even afraid to look in it," she
recalls, "but after about 20 minutes, I looked." Inside the box
was a gorgeous, and expensive, necklace --"a rainbow of stones going
from purple to blue," says Ms. Kratzer.
The necklace was a gift from a client in Abu
Dhabi, capital of the oil-rich United Arab Emirates. "I had actually
never met him, but I had been taking care of his finances," says Ms.
Kratzer.
She sent the necklace back -- it would have been
unethical to keep it -- but the gift was a sign of things to come. Ms.
Kratzer has a knack for winning the loyalty of world's rich. Today, she
flies around the world for Fiduciary Trust Co. International, a New
York-based firm that does investment management, trust services and banking
for wealthy families. And she is a veteran at providing financial services
to Canada's rich.
If you've never heard of Ellen Kratzer or
Fiduciary Trust, you're not alone. Fiduciary does no advertising in Canada
and has no retail branches; in fact, Ms. Kratzer doesn't even have an office
here. Instead, she jets in from New York to dine with clients at Canoe, a
fashionable restaurant overlooking the Toronto waterfront. She finds clients
through referrals from professionals who rub elbows with the rich -- tax and
estate lawyers, accountants, consultants.
Fiduciary is small: As of the end of 1999, its
global client base included 1,000 families. Just 20 of those are in Canada.
But it's high end, not to mention exclusive. The average client family has
US$14-million in assets under management with Fiduciary. "They're a
private bank of the type we just don't have here," says Keith Sjögren,
a consultant with the Taddingstone Consulting Group.
Simply getting Ms. Kratzer's attention requires
big bucks: You must have US$2-million to open an account. But she could give
the big banks a few lessons about how to treat wealthy Canadians.
For one, Ms. Kratzer knows the territory. She has
been covering Canada for most of the past 15 years. A common complaint among
the wealthy is that there's little continuity inside the major banks; their
bankers and investment advisors seem to move around every few years.
For another, when Fiduciary customers sit down to
talk about their investments, they meet directly with a portfolio manager.
"That's becoming more and more rare in the financial services
industry," says Ms. Kratzer. "Often there's somebody called the
banker or the relationship manager ... who is really a filter between the
client and the portfolio manager.
"It probably doesn't cost as much to have one
portfolio manager cloistered away who doesn't have to talk to clients.
That's fine for institutions. But if you're looking for after-tax results,
each person is different."
Canadian millionaires are also skeptical of the
investment research produced by bank-owned brokerage houses. In interviews
with Taddingstone, they complained that analyst research was tainted by the
banks' relationships with their corporate clients. Fiduciary, like a number
of domestic investment counselling firms that cater to the wealthy, doesn't
do underwriting work for, or lend money to, corporations, so its 22 analysts
have no such conflicts, says Ms. Kratzer.
Her clients' biggest concern usually isn't which
stocks and bonds to buy. It's how to transfer their immense wealth to their
heirs or charity without corrupting the kids or giving half of it to the
government in taxes. Setting up a trust or a corporation to hold it is often
the solution.
"A lot of people are interested in keeping
control of the money -- maybe even after they're no longer around," she
says. "A lot of fortunes have been made in the last decade, so people
who didn't really grow up with money are coming into large sums. Many of
them are really concerned with values, and they want their children to grow
up to value community service and not to be spoiled."
Ms. Kratzer's clients face at least one
disadvantage compared with dealing with a domestic firm, however. Fiduciary
doesn't have much expertise in Canadian assets, because its analysts focus
on global equity markets.
Ms. Kratzer says Canadians have always taken a
much more global view than Americans of their investments, anyway. "I
think it's changing in the U.S., but just due to the depth of the U.S.
market, Americans didn't feel they had to look outside," she says.
"In Canada, while there are a lot of interesting investment
opportunities, it's just not quite the depth and breadth of the world."
Being in New York does have a plus that few
Canadians might realize. It means Fiduciary Trust's advisors are expert in
the convoluted tax system in the United States.
That matters to wealthy Canadians with substantial
U.S. assets, who may need to set up a corporation or trust to avoid the tax,
says Ms. Kratzer. "If they have an account of U.S. stocks, you can
point out to them they might have an estate tax problem and immediately gain
them back 55% of what's going to go to their heirs," she says.
"That is much bigger than an extra 1% [return] on their
portfolio."
But the biggest thing Fiduciary does is try to
ease the worry that many wealthy people have about protecting their
fortunes, says James Goodfellow, head of Fiduciary's individual and trust
department. "A family that has a lot of money to invest usually takes
that as a very significant responsibility," says Mr. Goodfellow.
"A lot of times they're anxious about that responsibility. Our job is
to relieve that anxiety."
And that's worth more than any jewellery. -
National
Post
2001
It's hard to find
good help these days
Our millionaires panel is down on bankers -- and lukewarm on brokers.
You've got beefs with banks? So do Canada's
millionaires, big time. And they're not much different from yours and mine.
Consider this.
Ian, an elderly Ontario millionaire and a
self-described "good Scotsman" had a credit-card bill to pay.
Wanting to save the cost of a 46¢ stamp, he walked into a branch of his
bank with no tellers, but with staff working behind the counter.
"I stood there for about 10 minutes. All I
wanted to do was give them a cheque. Finally I said, 'I've got a bill I'd
like to pay.'
"They said, 'We can't deal with you now.
We're talking to customers.' "
That's the kind of basic service breakdown that
has turned many a Canadian millionaire away from banks.
In fact, according to a panel of eight wealthy
Canadians assembled recently by the Taddingstone Consulting Group Inc.,
banks serve as wonderful depositories for money -- but aren't much good for
anything else.
The panelists sat down in the posh Four Seasons
Hotel in Toronto's trendy Yorkville district to explore the health of their
relationships with investment counselors, bankers, brokers and other
financial professionals. The Financial Post persuaded our millionaires to
tell all for a $100 fee each, free sandwiches and wine. And we threw in a
promise to use first names only.
Essentially, the panel excoriated the banks, which
have attempted to service this rarified section of the market by
establishing private banking operations.
There was general agreement that banks have done a
lousy job in conveying precisely what private banking is, and how it can
benefit high-net-worth individuals. This is a particularly damning view from
the very bunch to which the banks are hoping to cater.
The panel's complaints about private banking
buttress some key findings of a recent survey by Taddingstone of Canada's
millionaires. It shows that 40% of respondents "don't really know what
private banking is," says Doug Trott, Taddingstone president. "And
that is a promotional problem because it's been around for 15 years."
Private banking has evolved from its original
focus on high-income borrowers to the broader needs of wealthy investors,
says Keith Sjögren, a former senior private banker at Canadian Imperial
Bank of Commerce and now a Taddingstone consultant. But "I would have
to say that private bankers did not keep up with their customers in any way
at all."
The number one concern of survey respondents about
private banking, he says, is the poor quality of service personnel.
Meanwhile, investment advisors and brokers fared
generally better at the hands of our panel.
Several panelists are quite pleased with the
service and advice provided by their full-service brokers.
However, there is also a feeling that some brokers
are too self-interested, focussed on generating fat commissions rather than
serving clients.
"The industry tends to want to get us in
there and keep us in there and never change anything," says one
participant.
Also, some of the newer approaches from brokers --
such as offering a hybrid of full-service and discount trading accounts over
the Internet -- hold little appeal to this group.
Finding the right way to address this market is
hugely important to all these financial professionals. According to
Taddingstone's survey, full-service brokers are the primary advisors to 51%
of Canadian millionaires; accountants, investment counsellors, financial
planners and private bankers are favoured by smaller percentages.
Without question, all would like to improve on
their shares of this lucrative marketplace. But, as the comments from our
panelists demonstrate, that's going to be a challenging task.
BANKERS AND PRIVATE BANKING SERVICES
(Editors
note: In Canada)
The huge concerns of our panelists centre on the
level and quality of service, as well as the quality of service personnel.
"Banks turn me off completely because I have
no faith at all that the person I'm dealing with to start off with will be
there in six months," says Steve. "There's no consistency in the
relationship."
Adds George: "I just use banks for chequing
accounts and so on. They want other business, but that's as far as it goes.
"I've had some of mother's money tied up in
Canada Trust and Toronto-Dominion Bank, but they do nothing for me. They're
happy to have the money and that's the end of it. I never hear from
them."
Mike has "a very simple account" with
ING, which is more or less the full extent of his dealing with banks. He,
too, is bothered by the lack of consistency in personnel.
"I don't think you can develop a relationship
with a bank for a long period of time because they switch people
around."
He also believes that "by and large,
personnel at banks are under-educated in terms of the specialities they
offer. It's better than it was 15 years ago, but it's still got a long way
to go."
Ian adds: "I find banks are great just to
hold money temporarily ... I certainly would not want to have any financial
transactions with them.
"I find we have to watch what they're doing
with the accounts. I would not want to trust banks to do any investing for
us, or listen to their advice."
Carol -- the only female on the panel -- says she
doesn't want to turn the family's assets to the trust operation of a bank
when she and her husband are gone.
"I'd rather give [the assets] to the children
and let them make a mess of it."
As for private banking service, only one of the
panelists confessed to using it.
Don is a client of the private banking services
offered by Canadian Imperial Bank of Commerce.
The value of the service, he says, is that it
connects him to other financial operations of the bank.
For example, problems with his brokerage account
at CIBC Wood Gundy can be solved with a word in the ear of his private
banker. "You can leverage them [private bankers] for other parts of the
bank's world," he says.
But other panelists aren't familiar with the
services, suggesting that marketing efforts have been feeble. Some have been
turned off by the little marketing they've seen. "I don't think they've
communicated the benefits properly," says Steve. He says the service is
being sold on the basis of snob appeal. "They should be marketing it on
a more significant level in terms of benefits to people."
Don suggests private banking would be much
improved if service could be provided in foreign countries -- particularly
the United States.
At present, there are few services available to
the globetrotting millionaire via his or her Canadian private banking
facilities, panelists say. Meanwhile, banks domiciled in other countries
provide a greater range of international services to their clients.
"I could use a lot of advice about
international/offshore [investments and strategies],' says Don. "But
the Canadian banks do not have a great deal of experience in the area."
He wonders: "Why don't Canadian banks truly
get into private banking at a high level like some of the big banks of the
world?"
INVESTMENT ADVISORS AND BROKERS
Our panelists are not nearly as hard on
full-service and discount brokers. However, many say they get more attention
from full-service brokers employed by small investment houses, rather than
those at big Bay Street firms.
Ian has dealt with a full-service broker from a
small firm for more than two decades.
"We have a broker ... who understands our
strategy, helps develop the strategy and doesn't forget it.
"We've had others who've felt we should have
a sale every day because they wanted to churn the account. You'll see by the
end of the month that they've done quite well, but the account has gone down
in value."
Several others have found dealing with
full-service people a less than wonderful experience. Mike spent several
years with one, but abandoned him because of unsatisfactory advice.
"In the last 10 years I have gone to a
discount brokerage and I'm happy with that. It's a hands-on thing. I'm not
paying somebody something" for questionable advice. "If I could
find somebody I had confidence in, I would probably pay for [the counsel],
but I haven't found that somebody," he says.
Steve has tried a big broker, but says the
experience is just too impersonal. "One day you call a guy and he's
moved. They don't really know your account -- they have no idea -- so we've
moved to a small one-man operation."
As a result, he gets better service, he says.
"This guy is a farm boy, but he hits it. He calls if there's something
interesting, sends you some work on it. You make a decision based on what he
is telling you."
The advice may be a little conservative, he says,
but "I don't think he missed twice."
Tom now trades over the Internet via discount
broker TD Waterhouse, after a couple of "bad experiences" at the
full-service counter. Also,"I feel there's a conflict of interest in
how [full-service brokers] get their commissions."
Some panelists would like discounters to provide
more research. However, they are not aware of recent efforts by several
brokerages to beef up the information available to their discount clients.
Hybrid investment services -- launched last year
by BMO Nesbitt Burns and ScotiaMcLeod -- have not generated much excitement
among our panelists.
These services allow wealthy, full-service clients
to trade using personal broker advice, or online with no broker advice but
access to research. ScotiaMcLeod's service is available to whose with a
minimum of $75,000 in assets with the firm.
BMO Nesbitt Burns' minimum is $100,000. Its
clients pay a fee based on a percentage of assets. ScotiaMcLeod customers
pay commissions -- below those charged on full-service accounts -- as well
as fees for advice.
However, not one of our panelists admitted to
using such a service. Which is odd, considering that they are exactly the
people the products are aimed at.
For those panelists not particularly plugged in to
the Internet, these services are non-starters: "I don't spend a lot of
time on the Internet, so I don't think this service would be of interest to
me," says Don.
Our panelists are also not terrifically impressed
with Merrill Lynch Canada Inc.'s plan to move up-market. It says it will no
longer pay brokers who deal with households with less than $50,000 in
financial assets.
"If somebody walked in with $50,000, who's to
say in two years they wouldn't have $300,000," wonders Steve.
"What the heck is that all about? You've got to bring the little guy up
and make him successful. Don't most people start with very little and work
their way up?"
Yes, that's true. But it's a lot easier to chase
the rich than to take a chance on the poor. - National
Post
2001
A HIGH-TOUCH, HANDS-ON GUIDE TO
WINNING OVER THE SEVEN-FIGURE SET:
WHO THEY GONNA CALL FOR ADVICE?:
Percent
Trust Officer 3
Other 7
Bank relationship manager 9
Lawyer 11
None 13
Private banker 15
Financial planner 20
Investor counselor 22
Accountant 33
Full-service broker 51
Source: Taddingstone Consulting Group Inc.
THE RICH WANT SMART, HONEST ADVICE:
Percent
E-mail access 0
On-line reports 1
Well-supported by experts 3
Objectivity 3
Reports and statements 3
Ability to excute and implement 10
Ongoing communications/information 19
Integrity and ethics 26
Level of technical knowledge 34
Source: Taddingstone Consulting Group Inc.
THE WEALTHY DON'T LIKE HOUSE CALLS:
Percent
Fax 1
Meet at lawyer's/accountant's office 2
Other 3
E-mail 6
Advisor visit your place of work 9
Advisor visit your home 11
Telephone 27
Meeting at advisor's office 37
Source: Taddingstone Consulting Group Inc.
BANKERS, OFFER QUALITY PEOPLE, NOT JUST PRODUCTS:
Improved locations/networks 6 Products
Dedicated web sites 11Products
Greater intergration with external service providers 15 Products
Greater intergration with other internal service providers 16 Products
Wider range of services 17 Products
More frequent contact 19 Products
Improvement in front line staff 23
More relationship benefits 25
Better pricing 32
Higher level of expertise 44
Source: Taddingstone Consulting Group Inc.
Yo ho ho and a bottle of Dom
Perignon
Yacht brokers help multi-millionaires move up from Jaguars to
multi-million-dollar customized boats
There's the mansion in the city, and a retreat in
the country. Maybe there's also the pied-à-terre in Paris, or a flat in
London's fashionable Kensington neighbourhood. Luxury cars fill the garage,
antiques the family home.
Then there's the motor launch or sailboat. A
sizeable chunk of Canada's multi-millionaires have a passion for the open
water, but the crafts they choose to take to sea are thousands of nautical
miles removed from your grandfather's leaky fishing tub with the baulky
outboard.
"The variety they can chose from [to]
customize or create from scratch -- a complete custom boat -- is
immense," says Dan Fritz, president of Queenship Yacht Works Inc. of
Vancouver. His company builds custom boats that hit the water at $3-million
and up.
Frequently, the vessels are designed to reflect
their owners' business needs or hobbies, or simply as lavish testaments to
their success, Mr. Fritz says.
A Vancouver entrepreneur, for instance, had a
150-foot motor yacht designed around his grand piano, which he loved to play
for business guests and friends.
This involved the construction of a large salon
where the owner could entertain. "You're not only dealing with space
but acoustics to make it work," says Mr. Fritz. Cost? In the vicinity
of US$20-million.
One boat his company built, he says, "had one
of the finest collections of West Coast Indian art around. The boat's
interior was themed around [it]." The price tag was about US$5-million.
"When you get to that calibre of boat, this
is building a dream," says Rick Irwin, president of the B.C. Marine
Trades Association. "For somebody with that kind of money, this is not
just buying a boat, this is an expression of the person."
Boating is without doubt one of the most popular
recreational activities of Canada's millionaires. According to a survey
conducted by Toronto-based Taddingstone Consulting Group Inc., 37% of
wealthy males and 18% of females list sailing as a recreational activity;
boating is highlighted by 43% of men and 38% of women, making it the second
most popular after-work pastime, behind golf.
The majority of wealthy Canadian boat buyers opt
for motor launches -- rather than sailboats -- according to yacht builders
and brokers. Prices range anywhere from about $500,000 for a 52-foot motor
vessel with minimal customization to $20-million and up for a 150-foot-long,
built-from-scratch, customized boat.
In many cases, owners will hire interior designers
to work on the staterooms and salons in the bigger boats. The best of
materials are used -- marble in the bathrooms, for instance, and teak or
mahogany woodwork throughout.
The same attention to detail is paid to
entertainment systems -- flat-screen TVs are popular, as well as satellite
systems that can be used when the ship is underway. It's not unheard of for
owners to hire consultants for audio systems alone. In one boat, Mr. Irwin
says, the audio system alone cost about $200,000.
Home theatre systems are not the norm, but they're
also "not out of the question," says Mr. Fritz.
Some large yachts are fitted with elevators to
lift guests from one deck to another, landing pads for the owner's
helicopter, garages in the stern to house shore boats or personal
watercraft.
Personal touches define the vessel. The 92-foot
sailing yacht of Michael Potter, who spent 20 years building Ottawa's Cognos
Inc. into a software powerhouse, is reported to have a fully restored, art
deco fireplace. The galley has granite countertops and a custom-made fridge
and freezer.
"The age of the boat being a really practical
utilitarian thing is kind of over," says Alan Adelkind, co-owner of
Angus Yachts of Toronto, a yacht broker.
Yacht brokers and boat customizers have the task
of helping customers determine what they want, and what is doable, given
their budgets. In Yacht Works' case, this generally involves a series of
meetings with clients, usually with a marine architect participating.
"We start off with a wish list and slowly trim it down to something
that works," says Mr. Fritz.
Angus Yacht begins with a needs assessment form,
which asks a series of questions to help define the client's requirements.
For example: "Do you want to own or rent a boat?"; how much
experience have you had?"; "How far afield do you plan to
sail?"
Once the assessment is completed, "we start
looking for boats," says Mr. Adelkind.
He generally tries to round up five or 10 possible
candidates. But if nothing is acceptable to the client, a boat can be built
from scratch. This can cost twice or three times the amount spent on
customizing an existing boat and takes more than a year.
A big chunk of Mr. Adelkind's and Mr. Fritz's
business comes from calls from the public, and repeat business from regular
customers. "Out of the blue a couple of days ago, one of my clients
called me. He'd just been in the Caribbean [where] he saw a 165-foot sailing
yacht," says Mr. Adelkind. "He knows it's in the $10-million to
$15-million range ... and he's got me researching it."
Boat shows are also a huge source of business.
Noteworthy for big money are shows in Fort Lauderdale, Antigua and Monaco.
Mr. Adelkind also scans appointment notices and
social columns in newspapers. He pores over magazine lists of the wealthy.
"I just want to know these names," he says. You never know, one of
them may ask him to find a $25-million boat. - National
Post 2001
The rich are not so different from you
and me after all, according to the people who manage their money.
Millionaires may have worked harder than
the average Joe or Jane and they may be better savers, but they are as
intimidated by the world of investing as the average Canadian.
Typically, they make their money slowly,
living modestly while building a business. When they hit the jackpot, they
make sure it is invested sensibly and then fade into the background,
sometimes dressing down to disguise their affluence.
While they live prudently, they aren't
misers.
"They understand value and they are
prepared to pay for it," said Tim Griffin, an adviser to the wealthy as
chairman and CEO of Vancouver-based Connor, Clark and Lunn Private Capital
Ltd.
"They are most concerned with
building a good relationship, getting to know the person they are dealing
with and developing trust."
Still, they won't pass up a freebie. An
astonishing 45 per cent hold CIBC's Aerogold Visa card, collecting points
toward free travel on Air Canada. They charge about twice as much each year
as the annual $6,000 charged by the rest of us.
Despite their low profile, there are some
clues to help identify Canada's estimated 330,000 millionaires next door.
For starters, four out of five are male
and their average age is 57, according to the Taddingstone Consulting Group,
a Toronto-based firm that advises some of North America's largest financial
services companies.
They are more likely to be married -- 88
per cent versus 62 per cent of the adult population in general -- although
their spouses may not know the full extent of their wealth.
Typically they keep $250,000 in online
trading accounts as play money to test their own investment theories and to
build a separate nest egg from their professionally managed wealth.
With markets in turmoil, some
millionaires take the view that if you are on the Titanic, you might as well
grab the wheel, said Keith Sjogren, leader of Taddingstone's wealth
management practice.
Their vehicles of choice are a Mercedes
or BMW which they park in the driveway of a home worth $885,000 on average
-- more than $1 million if they live in the Vancouver area.
Surprisingly, 20 per cent have yet to pay
off the mortgage, although the average mortgage is, to them, a piffling
$220,000.
Health and well-being is a priority for
the rich with golf clubs being the most popular club membership.
When they donate to charity, most
millionaires focus on health-related causes. Giving back to the community is
a priority with 94 per cent making charitable donations and 23 per cent
serving as directors of non-profit organizations.
Some 10 per cent of B.C. millionaires
give more than 10 per cent of their income to charity, Sjogren said.
They also reward themselves from an
average annual income of $409,000 -- about eight times more than the average
Canadian household.
Travel is a big indulgence and frequently
they own multiple residences, says Rod Scheuerman, vice-president of
ScotiaTrust, a division of Scotiabank in Vancouver.
According to Taddingstone, some 44 per
cent have a cottage, farm or chalet for recreation, with an average value of
$520,000.
And whether at work or play -- 26 per
cent are retired -- they are wired with electronic gadget use on the rise.
They may be lounging by a lake but they are still in touch. Some 68 per cent
use the Internet to help manage their wealth.
When they need to visit their financial
adviser, 29 per cent drive German luxury cars, followed by Japanese models
at 18 per cent and North American at 12 per cent.
Sjogren says the best way for financial
advisers to woo wealthy clients in Vancouver is to play golf. Residents of
B.C. spend five times as much on the sport as any other Canadians.
"If you are going to deal with rich
guys, it also helps to be a smart guy, because most rich guys are pretty
smart," Sjogren said.
Seventy five per cent have a university
education, compared to 39 per cent of the adult population with a college or
university degree, but almost all credit hard work rather than scholastic
achievement for their success.
Taddingtone's statistics are based on
annual surveys of about 400 Canadians with an average wealth of $3.4
million. About 12 per cent of Canadian millionaires have a net worth in
excess of $5 million.
Investment risk profiles of the rich
cover the spectrum, said Sandra Hrvacanin, an investment adviser with RBC
Investments in Richmond where she counts about five per cent of her 250
clients as millionaires.
"I have some wealthy clients who
have everything in guaranteed investments and some that have almost
everything in equities," said Hrvacanin, who is also president of the
B.C. chapter of the Canadian Association of Financial Planners.
"It is usually a very personal
decision based on their background and experience."
Understandably, the wealthy want to hang
on to their money and pass it along tax efficiently when they die, so they
tend to spend more time on estate and tax planning than the average client,
Hrvacanin said.
Sjogren contends that millionaires could
well have stronger stomachs along with their bigger wallets.
Despite losses on stocks, growth was
still the main investment objective identified in the 2001 Canadian
millionaire report. Diversification was an important consideration but
safety, represented by bonds and money market investments, held less
priority. - by Michael
Kane Vancouver
Sun 26 August
2002
|
