WHEN JPMORGAN PRIVATE Bank anonymously polled a group of clients and their children at a global seminar held in London in June, it unearthed an interesting anomaly. Seventy per cent of ultra-wealthy parents thought they had done a great job in communicating issues surrounding the family wealth. A mere 20 per cent of their offspring agreed.
'Right there in those answers you can tell that there is a huge gap between the generations,' says Maria Elena Lagomasino, the bank's chairman and chief executive. 'I know it sounds a little insensitive, but the truth is wealth brings with it a series of responsibilities and burdens and knowledge. It is incredibly important that the existing generation teach the next generation what has to be done. They need to prepare for succession exactly the same way the CEO of a company would.'
Admittedly, JPMorgan's clients are a cut above the rest. The bank targets the top 1 per cent of the wealth market population that, according to the World Wealth Report from Merrill Lynch/Cap Gemini Ernst & Young, controls 52 per cent of the world's wealth.
'We take a look at clients who have a net worth of at least US$25 million and above,' Ms Lagomasino says. 'Typically, that will translate to liquidity in at least the US$10 million range.'
This ultra-high net-worth market differs from that of the merely affluent. Typically, at least 25 per cent of their money is tied up in real estate and the same amount in their own private company or business.
'Affluent people actually might have a lot more liquidity because they are corporate executives who are paid salaries and make money over time. It is a totally different mix. When we work with [ultra-high net-worths] we also need to understand their businesses, their real estate, their art collections - whatever it is,' she says.