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Barclays Wealth Survey Shows Increasing Appetite For Alternative Investment

by Robin Pilgrim, LawAndTax-News.com, London

25 October 2007


New research published this week by Barclays Wealth has suggested that successful entrepreneurs are more likely to take risks in creating their wealth.

A report, entitled 'Barclays Wealth Insights: Risk, Return and Reward', revealed that some 60% of those with assets of more than $1 million said a high appetite for risk had been a big influence in generating their wealth, compared with 36% of those with less than $1 million of assets.

“This report reinforces the importance of the link between risk and wealth generation,” observed Kevin Lecocq, Chief Investment Officer at Barclays Wealth. He continued:

“What is interesting is the anomaly between an individual’s willingness to take risks when creating wealth and their reduced appetite for risk when it comes to investing that money.”

The research went on to show that while entrepreneurs are willing to take risks to succeed in business, they are more risk averse with their personal investments. The report shows that individuals with more than $1 million do not take higher risks with investments than those with less money. This suggests that entrepreneurs are more willing to take risks in their own businesses, than with investments.

Wealthy investors are now able to spread risk more widely by adding different types of assets to their portfolios, according to the report. Interestingly, it reveals a trend amongst wealthy investors of an increasing appetite for financial products that help reduce volatility such as derivatives, private equity and hedge funds, particularly in the Middle East and Asia.

“Intuitively, absolute returns make a lot of sense and we see that more wealthy individuals are thinking in those terms,” added Kevin Lecocq.

The findings also indicated that wealthy families are encouraging children to gain a university education and have their own careers, as they aim to ensure their children strive to achieve their own success. More than a third (34%) of those questioned think it is a bad idea to leave large sums of money to their children.

Interestingly, those who have inherited their own wealth are even less likely to pass on large sums of money to their children than those who have earned their wealth. Some 41% of respondents whose wealth was given agree it is a bad idea to leave large sums of money to children, compared with 33% of respondents whose wealth was earned.

Barclays Wealth surveyed 790 wealthy individuals, in partnership with the Economist Intelligence Unit (EIU).


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