Russia: Young rich want more
Russia's domestic wealth management industry has a long way to go
Russia's wealth is racing ahead of that of its eastern European counterparts, and its youthful rich will change the investment landscape. A report by wealth management think-tank Scorpio Partnership shows that Russian high-net-worth individuals control about $325 billion in assets, around $70 billion more than those in Poland, the next wealthiest country in the region.
For fund managers and private banks, the country offers significant opportunities. "Over recent years we have witnessed increased activity in the financial services sector as regard the promotion of private banking services to Russian clients," says Ekaterina Lazorina, a partner in the financial services practice at PricewaterhouseCoopers.
"Wealth is owned and predominantly rests in the hands of young entrepreneurial and professional nouveaux riches residing in the major centres across the region," says Scorpio's managing partner Sebastian Dovey. "They are the engine room of future growth and they are already showing strong signs of interest in broader wealth management solutions."
This young wealthy investor base could change the shape of asset allocation in Russia. Ted Wilson, a consultant at Scorpio, says that Russians with wealth of $1 million to $10 million tend to have their onshore wealth allocations 30% invested in domestic real estate, with 25% in domestic cash, 25% in offshore cash, 10% in domestic fixed income, and 10% in international real estate or emerging markets fixed income.