Survey: HNWIs don't spend in what they invest in

70% of high net worth individuals (HNWIs) report increased assets in the past 12 months, and this increased income comes with corresponding changes in lifestyle — according to the latest Julius Baer Global Wealth and Lifestyle Report 2024. 

The report is compiled by Julius Baer, a Swiss private bank, and measures the cost of living for HNWIs around the world. The report also surveys HNWIs and to track trends in their purchasing and investment habits. To do so, Julius Baer looks at 20 non-essential goods and services that affluent customers buy and use — such as residential property, private education, and high end consumer goods like cars, jewellery, and clothes.

Living the high life

The increased assets that HNWIs have are driving a new economic and lifestyle boom. Over the past 12 months, demand for travel, hospitality and luxury has increased — but there is little consistency across the regions. 

Overall, all regions saw increased spending by HNWIs on travel and hospitality.

For travel, the increase in leisure travel was greater than business travel in all regions, a trend that is only projected to continue. More than 50% of respondents in all regions expect to travel more for leisure in the coming year.

The report links these trends to the pandemic. It asserts that business travel experienced an initial boom after the pandemic, and is now slowing as hybrid work patterns become increasingly mainstream, while leisure travel is growing in popularity as people decide to experience life more thoroughly amidst the numerous crises of the world today. 

The drop in the price of business flights reflects this trend as well. 

Fine dining and five-star hotels were especially popular in APAC, with those surveyed saying that they spent 71% and 74% more respectively in the last year. 

These two luxuries were far more popular in the APAC region than in Europe (where they were also the top two), with European HNWIs spending 54% more on fine dining and 52% more on five-star hotels over the last year.

What is said

While they invest in gastronomy and luxury stays, the APAC region is also notable for their high investment into healthcare. Of those surveyed, 63% of them said that their non-essential healthcare expenditure increased over the last year, as compared to only 37% of those in Europe and North America.

The report attributes this to an increasing trend in “future-proofing,” where HNWIs are more conscious of taking care of themselves and their families, while minimising the impact of disruptions on their investments.

As part of the future-proofing trend, more HNWIs said that ESG is an important consideration for their investments. The APAC and Latin America regions were the most conscious of ESG, with 80% and 83% of them respectively said they try to have a positive impact on the environment and society through their investments.

Europe and North America were less ESG oriented. In North America only 43% said they are trying to have a positive impact with their investments, while 35% of them actively disagree, meaning that North America had the largest proportion of ESG investment detractors worldwide.

And what is done

However, when it comes to purchasing decisions, most consumers don’t follow their investments. 

According to the report, the top two considerations that HNWIs in all regions have in mind before purchasing anything are brand history and innovative design.

Sustainability is only ranked among the top five considerations in the APAC region.

The larger proportion of HNWIS who purchase sustainably in the APAC region could be explained when consulting the cities that were surveyed. These cities, such as Mumbai and Tokyo, are already feeling the effects of climate change starkly. Earlier this year, Mumbai recorded their highest temperatures in ten years. Both cities are also facing a greater risk of floods — by 2050, Mumbai will witness a 25% increase in the intensity of flash floods, while the depth of flooding in Tokyo will increase by 170%. 

Closing the gap between what affluent consumers say and what they purchase will take a while longer as it appears that demand still outpaces ethics in most parts of the world.

The future-proofing trend identified by the report may indicate a slow change for the future, where HNWIs will eventually integrate sustainability into their life and investment decisions across all markets.

The full report can be found here.