Riches that remain out of reach

According to the 2008 version of the annual Sunday Times Rich List the richest thousand in Britain now control assets of £412bn (E518bn) up 14.7 per cent on 2007, and four times more than when Tony Blair entered 10 Downing Street. How tantalising this must be to private bankers casing the joints in Mayfair and the other habitats of the super rich. But how disappointed their employers will be when they fail to get their hands on the extra billions. This is because the Rich List, like other well-known yardsticks of wealth and ultra-wealth, greatly overstates the levels of assets actually available to the wealth management industry. While recognising the usefulness and interestingness of exercises such as the Rich List, the Forbes lists and more scientific endeavors by Capgemini and BCG, Scorpio Partnership wonders how relevant this is to private bank strategies, except to over-inflate asset gathering expectations? For example, as revealed in Scorpio Partnership’s Private Banking Benchmark 2007, of the $37,200bn potential universe of HNW assets world-wide, only $24bn (E15.3bn) are bankable and probably only $16bn are actually in the hands of private banks. The clear inference is that only a proportion of the Rich List’s £412 bn is potentially destined for private banking books. One area of the list that private bankers may decide not to spend too much time on is on those individuals who have made fortunes managing their own money: the hedge fund managers. While these hedgies are unlikely to be pleased about the increased attention they have received in the Rich List this year, the growing transparency of the hedge segment means there is now a dedicated ranking of investment titans.

As HNW investors in successful hedge funds can attest, there has been a stratospheric growth in the wealth of London’s hedge fund managers. The combined wealth of the 47 players on the list has hit nearly £10bn and accounts for 37 per cent of the wealth of the richest 100 financiers, much of which belongs to banking dynasties like Flemings, Rothschilds and Schroders. In fact, top of this list was Nat Rothschild of Atticus with £1.4bn. Second was Louis Bacon of Moore Capital with £750m, followed by rivals Noam Gottesman and Pierre Lagrange of GLG Partners with £460m each. Looking at the Rich List more generally, the top four remained as last year, although Indian steel magnate Lakshmi Mittal, saw his fortune jump to £27.7bn from £19.25bn in 2007. This year’s number five is a new entrant, the stake builder at Arsenal Football Club and number two Russian on the list, Alisher Usmanov with £5.7bn. The entry of Mr Usmanov into the top 10 is further evidence of the rise to prominence of a global financial elite using London as a base and centre for business and investment operations. In fact, of this year’s top 20, only six entrants are British-born. And while there has been plenty of noise in the market about the UK Treasury’s recent changes regarding resident non-doms, it is unlikely that the £30,000 levy will have much effect on the future composition of the Sunday Times list. Ted Wilson is managing partner at wealth management strategy think-tank, Scorpio Partnership