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Super Rich Giving More While Markets Perilous, According to Bankers at Reuters’ Wealth Management Summit


Super-rich giving more while markets perilous

Article from by Tom Miles 5 October 2011

(Reuters) – More and more multi-millionaires are opting to give away some of their money while financial markets are so risky, according to bankers to the very rich at the Reuters Wealth Management Summit.

“One of the things that people are very focused on these days is philanthropy. This is not new. But there is a raised awareness, with the difficulty around the world, (and people are asking) ‘How can we give back?’” said Pablo Garnica, head of private banking in Europe, the Middle East and Africa at JP Morgan Private Bank.

Faced with investment scenarios that range from depressing to disastrous, many private bankers are now telling their clients not to bank on increasing their fortunes but to settle instead for “wealth preservation.”

To add insult to injury, the rich have perhaps never been so unpopular, with protesters from Los Angeles to Boston campaigning against economic insecurity under the banner “We are the 99 percent.

Against such a backdrop, many of the super-rich are opting to put money into philanthropic causes.

“Philanthropy is one of the most fulfilling activities,” said Pierre de Weck, global head of private wealth management at Deutsche Bank AG.

“If you build a tremendous amount of wealth and can afford anything you want in life, to find a new fulfilling activity, often at an advanced age when the business is turned over to a new generation and a degree of emptiness comes to the individual, it becomes a real passion.”

Tan Su Shan, head of wealth management at Singapore’s DBS, said so-called “social impact investing” was developing into an attractive new asset class.

“As the market gets more cognisant and as investors get more mature in their investment and more philanthropic in their asset allocation, that could be another new asset class that has very little correlation with the macro market,” she said.

At Coutts & Co, part of Royal Bank of Scotland, clients wanting to put something back into society are offered help with a “giving strategy,” said James Fleming, head of international private banking there.

“People who have created wealth want to give some of that back. A lot would say they’ve been lucky. A lot of them want to do something for this cause or that cause or to help society generally,” he said.

Coutts has a handbook to help its clients with philanthropy, and its website offers perspectives from experienced givers such as Mary Archer, a British scientist who is married to millionaire novelist and former politician Jeffrey Archer.

The irony is that offshore private banks are traditionally used by investors wanting to minimize their taxes, and many governments are now in dire need of more revenues to stabilize their economies.

The epitome is Greece, where the word “philanthropy” came from, which is now at the eye of the financial storm.

Greece’s economic problems are so deep that only a political solution can resolve them, but the mega-rich could still do their bit, said Vassilis Monastiriotis, a lecturer in political economy at the Hellenic Observatory, part of the London School of Economics.

“If you want to be philanthropic, you shouldn’t expect full repayment of debts,” he said by phone from London. “It now seems (that) to really stabilize Greece you’d be looking at something like a 50 or even 60 percent haircut. You can see some scope for philanthropy there.”

However, most wealthy philanthropists see their chosen cause as more deserving than their own government. The one big exception is billionaire investor Warren Buffett, who has called for the super-rich to be taxed more.

Peter Fanconi, head of private banking at Vontobel Group AG, said there were certain role models for philanthropy, but he had yet to come across any of his clients making similar suggestions to Buffett’s.

(Reporting by Tom Miles, additional reporting by Kevin Lim in Singapore)


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