Wealth Report: Russia
The inaugural edition of Julius Baers ‘Wealth Report: Russia’
“Russia, Central and Eastern Europe (RCEE) is the second largest market within the Emerging Markets Region in terms of assets under management (AuM), with important countries such as Russia, Kazakhstan, and Azerbaijan”, says Michel Wuest, Market Head RCEE International. The ‘Wealth Report: Russia’ has been created to present and describe the macroeconomic outlook for these three countries, give an overview of the Russian financial market developments, and present some interesting information on the high-net-worth individual (HNWI) market in Russia”.
Following its successful introduction in the first ‘Wealth Report: Asia’ in 2011, the Julius Baer Lifestyle Index methodology has been applied in this report to the three Commonwealth of Independent States (CIS) capital cities: Astana, Baku, and Moscow. This methodology focuses on monitoring the cost of a basket of goods and services representative of the cost of living for HNWIs in these three cities. The results show that of the three cities, Moscow is the most expensive, with Baku, in most cases, being the least expensive in terms of both goods and services.
The report also portrays Russian wealth possessors, the composition of their assets, and their investment choices. According to the study, Russian wealth possessors are, on average, 50-55 years old, married with three children; their wealth is self-made, and they have roots in Russia, where they plan on living for at least the next ten years.
The report shows the diversity of the portfolio of Russian HNWIs and reveals that Russian wealth possessors’ needs are centred on wealth preservation and security.
A separate chapter is devoted to discussing succession planning of HNWIs in Russia and how they prepare the second generation.
Overall, the past few years have been a difficult period for Russia, Kazakhstan, and Azerbaijan; however, these countries’ economies demonstrated strong resilience and are expected to return to growth in 2017. The number of HNWIs has remained relatively stable during recent years and is expected to grow in the long term.
The fact that prices for many luxury items in Moscow remain higher than in many other jurisdictions is indicative that demand from HNWIs remains strong.
“The findings of the report bring us to the conclusion that for the first time in many years, the economic outlook of the examined countries is positive. The ‘Wealth Report: Russia’ provides insights into the economies of the three countries and shows our dedication to help clients understand the financial trends and peculiarities of the RCEE region,” Ewgeni Smuschkovich, Market Head RCEE Europe, concludes.