New Vistra report reveals key insights into wealth and philanthropy

Vistra, a provider of expert advisory and administrative support to Fund, Corporate, Capital Market and Private Wealth clients, has released its first global research study on private wealth and the future of philanthropy.

Titled ‘Global Private Wealth and the Future of Philanthropy 2021: Looking Beyond the Covid-19 Pandemic’, the report considers the views of 225 high-net-worth and ultra-high-net-worth individuals across the globe, and reveals key insights and the approach to wealth planning adopted by these individuals.
This research was conducted amidst the Covid-19 pandemic in the third quarter of 2020 – a context which influenced many of the responses and shifts reflected in the report.
“2020 has been a watershed year in more ways than one," says Chris Marquis, Global Head of Private Wealth, Vistra. "In the area of private wealth, we have seen clients diversifying their wealth allocation, some of which include an increase in philanthropic contributions, especially in the areas of health and environment. That said, while the coronavirus pandemic has alerted many to the fragility of human life, the importance of succession planning has yet to sink in with the majority of respondents. By launching this report, we hope to heighten awareness of how wealth planning and philanthropic investment must evolve with the times.

“It’s also worth noting that there is no one-size-fits-all approach to wealth planning and philanthropic engagement, as we’ve seen approaches vary significantly across regions. Indeed, factors such as differing laws, religious and cultural perspectives on charity, as well as government attitudes to wealth, all weigh in on how individuals from different regions choose to manage their assets.”

Thirty six per cent of respondents have stated an increase in their philanthropic activities in 2020, which was partly catalysed by the coronavirus pandemic. This is evident from the significant growth in philanthropic contribution to health and environmental initiatives, which look to remain the top beneficiaries of corporate and private donation in the next 12 months.
In addition, people appear to be more flexible and reactive in their giving – responding quickly to matters happening around them on a large scale. There has been a trend from passive to active philanthropy and the pandemic has accelerated this. This shift is also echoed in how respondents are involved in running a foundation where only 24 per cent were actively involved, but 57 per cent plan to be in the year ahead.
While the pandemic has put our mortality into perspective and many respondents highlighted succession planning as a priority, there seems to be a disconnect between the urgency and actual planning for succession. Just 52 per cent of respondents report having a succession plan in place, and this number only rises to 73 per cent among the highest age group (those over 60), with only 18 per cent in the under 40s age group.
This may highlight that although Covid-19 may have created a short-term sense of urgency, the survey points to a far less structured approach when it comes to how often succession plans are reviewed and updated. Periodic reviews of succession plans are not common practice, with 58 per cent stating that they only review such plans on an ad hoc / as needed basis and a further 22 per cent only do so every five year or more. Only 1 per cent review it annually and 19 per cent biannually.
Considering the rise of environmental, social and governance (ESG) investment, alongside a broader awareness of climate issues globally, the survey also examined attitudes towards ESG investment. The element of ESG which was most important when making an investment decision was social (41 per cent), followed by corporate governance (31 per cent) and then environment (28 per cent).
However, since the pandemic, there has been a major increase in the importance of each element of ESG – 61 per cent put greater importance on corporate governance, 51 per cent on social and 33 per cent on environment. We see that environment features lowest across all respondents – however as we noted above, this is contrary to philanthropic endeavours where environment is a high priority for many.
Although family, friends and advisers have a key influence, with the rise of digitalisation, 48 per cent of the respondents indicate that they use social media to source philanthropic projects and 37 per cent use web searches. The natural inference is that this is simply a result of the times we currently live in, as well as an extension of the crowdfunding model that relies so heavily on social media networks. While it is understandable that the proliferation of social media has opened everyone up to projects that they might not have come across otherwise, it does stress the importance of appropriate due diligence on any philanthropic endeavour.

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