High Net Worth & Ultra High Net Worth Investment Plans in 2007

John Clemens, Managing Partner of Tulip Financial Research Ltd, commenting on the report findings said:

“As the rich in Britain become even richer private banking is changing its image. Private banks now actively market themselves to new clients instead of relying on referrals from past clients and friendly intermediaries. As a result many HNWs and Ultra HNWs, who once invested without professional advice or had long standing relationships with accountants or IFAs, now conduct beauty parades with rosters of private banks. The successful private banks in the 21st century will be those hungry for wealth business and proative in its acquisitiion .”

[1]This report is based on a representative survey of 213 HNW and Ultra HNWs conductedby Tulip in January & February 2007.

[2]* Liquid assets are defined as “the total amount of funds that are in the form of cash or can quickly be converted to cash. These include (1) cash; (2) demand deposits; (3) time and savings deposits; and (4) investments capable of being quickly converted into cash, either through their sale or through the scheduled return of principal at the end of the period remaining to maturity. The Tulip definition includes investment property excluding investor homes & second homes

1.Introduction......... 1

Figure 1: The 2007 distribution of liquid financial asset wealth within the wealthiest 5% of in the UK ..... 1

Figure 2: The occupations of HNWs & Ultra HNWs: Britain’s wealth elite...... 2

Figure 3: The household incomes of HNWs & Ultra HNWs.... 3

Figure 4: Cautious or risk-taking...... 4

2. Executive Summary............. 5

The UK wealth market.............. 5

FTSE expectations for 2007................ 5

Trends in HNW & Ultra HNW asset allocation 2005-07........... 6

The use of professional investment advisers......... 6

The impact of advisers on investment ownership and allocation.......... 6

The role of private banking............ 7

3. HNW & Ultra HNW FTSE 100 Expectations 2004-07.............. 8

Figure 5: HNW & Ultra HNW FTSE expectations, December 2004-07.............. 8

4. HNW and Ultra HNW Asset Allocations 2005-07.............. 10

Figure 6: HNW & Ultra HNW asset allocations 2005/07............... 11

Figure 7: The five fastest growing allocations, 2005-07.................. 12

Figure 8: The prevalence of equity investments in UK listed companies................ 13

Figure 9: The prevalence of UK listed company equity investment......... 13

5.The Use or Non-Use of Professional Advisers............. 14

Figure 10: The use and non-use of professional investment advisers........... 14

Figure 11: Use and non-use of professional investment advisers................. 15

Figure 12: 2005/07 sources of investment advice................ 15

Figure 13: 2005/07 sources of investment advice................... 16

6. The Impact on Investment of Professional Advisers............ 17

Figure 14: Use and non-use of professional investment advisers............... 18

Figure 15: Asset allocations 2007: The advised portfolio v the un-advised portfolio............. 19

Figure 16: HNW v Ultra HNW investors’ investment category ownership............ 20

7. The Planned and Preferred Investments for 2007............... 22

Figure 17: 2007 investment plans........ 23

Figure 18: 2007’s preferred investments..... 24

Figure 19: The top six 2005 and 2007 planned investments of HNWs & Ultra HNWs............ 25

8. The Role and Value of Private Banks and Private Banking............ 26

Figure 20: The 2007 sources of HNW/Ultra HNW investment advice................ 26

Figure 21: The private bank services used in 2007................ 27

Figure 22: The private banking rationale........ 27

Figure 23: Private banks, 2005-07......... 28

Figure 24: Private bank satisfaction levels............. 29

Appendix One............ 30

The Tulip Wealth Model............. 30

The Sunday Times Rich List 2002............... 30

Appendix Two............. 31

Technical note................ 31

Appendix Three............. 32

About Tulip Financial Research.............. 32

Appendix Four.......... 33

Data tables 1-21............. 33

Table 1: For this survey we need to interview a wide range of investors. Would you tell me which of these best describes the value of the total investments held by you and your family? by investments I mean things like savings accounts, unit trusts, bonds, hedge funds, shares, ISA's and so on, including property bought as an investment, but excluding your main home or second home, is it... by profile...... 33

Table 2: Last year the FTSE/Footsie 100 index of share prices rose from 5760 in January to 6225 in December. What level would you expect the FTSE/Footsie 100 index to be at by the end of this year, that is by end December 2007? by profile......... 34

Table 3: Which of these kinds of investment do you and your family currently own? by profile....... 35

Table 4: Out of every £1000 of your current investments, approximately how much is invested in... by profile......36

Table 5: Approximately what proportion by value of your company shares is held in UK listed companies? by profile...... 38

Table 6: And what proportion by value of your UK listed company shares is invested in FTSE 100 shares? by profile...... 39

Table 7: And what proportion of your UK listed company shares is invested in FTSE 250 or FTSE100 shares only? by profile...... 40

Table 8: Which would be your two most preferred investments? by profile......... 41

Table 9: With which of these private banks, if any, do you have any relationship: a current account, a savings account, investment management, loans or anything else? by profile....... 42

Table 10: For which of these services would you use your private bank or banks? by profile............ 43

Table 11: Which two of these reasons best describes why you now use a private bank or might use one in the future? by profile 44

Table 12: How satisfied are you with the services you get from your private bank? by profile............ 46

Table 13: With which of these retail banks, if any, do you have a current account? by profile........... 46

Table 14: And with which do you have a deposit, money market or savings account? by profile............ 47

Table 15: With which of these retail banks, if any, do you have a current account, deposit, money market or savings account? by profile 48

Table 16: How satisfied are you with the services you get from your retail bank? by profile........... 49

Table 17: Which of these best describes your approach to making new investments? by profile.......... 49

Table 18: Which of these best describes your attitude to investment? by profile.......... 51

Table 19: Which of these best describes your occupation/(if retired/not working) your most recent occupation? by profile 52

Table 20: Respondents gender by profile................ 52

Table 21: Into which of these income groups does your total household pre-tax income fall: that is your income from any source? by profile..... 53