Elite Entrepreneurs’ Investment Preferences Highlight The Need For Trusted Advice
In March 2020, BNP Paribas Wealth Management released the first part of its 2020 Global Entrepreneur Report. The report, based on entrepreneurs sentiment at the end of 2019 – and thus before the Covid-19 crisis, is a fascinating and comprehensive dive into the mindset of Elite Entrepreneurs globally, illustrating their attitude to investments & asset classes and their appetite for risk. The key conclusions of the report, analyzing the answers from 1,132 wealthy entrepreneurs representing in excess of USD 18bn investable private wealth, illustrate many interesting trends.
In 2019, Elite Entrepreneurs favored their own business as well as listed equities.
Interestingly, two other major asset classes – cash and real estate – are considered as non-risky, and 38% of investors emphasize the fact that low interest rates are pushing them to invest more in their own business.
Conversely, the attitude to sustainable investment offers a contrasted landscape. 70% of Elite Entrepreneurs are much more willing to invest sustainably than 18 months ago. At the same time, 58% believe it requires a long-term sacrifice to return, despite the lack of evidence regarding such a sacrifice.
These conclusions paint a clear picture of Elite Entrepreneurs looking to invest in “safe” assets. In turbulent times, there is a natural appetite for investments perceived to offer safety. For many, it will lead them towards cash and real estate. Globally, 23% of entrepreneurial wealth sits in these two asset classes.
Our report shows that their attachment to real estate, an asset class that is well known and tangible, persists over time as is investing in their own business, where they understand exactly what is happening and how. Together, these two asset classes represent clear choices of investment with limited uncertainty and limited market valuation exposure.
Overall, these conclusions illustrate Elite Entrepreneurs’ need for transparency and clarity in defining their private investment strategy.
WHAT DO THEY VALUE FROM THEIR PRIVATE BANKER?
In previous reports, Elite Entrepreneurs have already cited their private banker as a major source of information for decision-making. In this new 2020 edition, entrepreneurs pay particular attention to their primary wealth manager’s performance analysis and portfolio valuations.
BNP Paribas’ private bankers are there to fill this very gap, to ensure a client can receive the right information in a transparent manner and use objective data to make decisions. This trusted advisory role is at the heart of the role of a private bank. In today’s exceptional context, decoding financial markets is key. Our global network of Chief Investment Officers gives the latest market trends and financial news to help Entrepreneurs define their investment strategy (you can take a look at a digest of our latest CIO investment strategies by clicking below).
WHAT DO THEY EXPECT FROM THEIR PRIVATE BANKER IN THE AREA OF SUSTAINABILITY?
In the area of sustainability, where appetite and expectations are strong, 39% of Elite Entrepreneurs want an introduction to sustainable investment fund opportunities.
“Q: What more could wealth managers do to support your interest and learning around sustainable and responsible investing?” Entrepreneurs replied:
1. 39% Introduce me to sustainable investment fund opportunities
2. 38% Provide information about sustainable investing
3. 36% Provide a wider range of sustainable investment opportunities
Globally, Elite Entrepreneurs ask to learn more about sustainable investment opportunities. It is even more true for UHNWs and particularly those in APAC who answered even strongly.
This is also what our private bankers see today: private investors demand more responsible investment options to create positive impact investing and to support the most sustainable companies.
To answer this growing appetite, our experts select Sustainable and Responsible Investment funds aiming at supporting activities with a strong social and/or environmental value, in addition to financial performance. One of the key roles of our private bankers is to bring the right level of expertise in advising their clients about how to seize the opportunities brought by sustainable and impact investments, helping clients navigate what is a rapidly evolving but still complex ecosystem.
One innovation is the release of an innovative digital tool, “myImpact”, co-created with clients and focused solely on helping clients to understand better their own impact and philanthropic profile. Through this digital tool, clients gain a better understanding of their own preferences, which then serves as a framework to design a fully customized investment strategy.
We are looking to see how the current situation related to the Covid-19 pandemic will impact how entrepreneurs have allocated their assets during such a turbulent, uncertain period.
Learn all about the private investments of the most successful international entrepreneurs: