US Open winner Emma Raducanu’s instant wealth will require sound advice from private wealth professionals. But Raducanu isn’t the only person dealing with a sudden increase in personal wealth, says Gillian Kennedy-Smith (pictured), Trusts and Private Client Partner at Mourant.
Lifting the US Open trophy will of course have been the highlight of Emma Raducanu’s last few weeks, but alongside the trophy she also scooped US$2.5m in prize money. It’s safe to say the teenager’s bank account will have looked radically different from one day to the next.
Raducanu is part of a new wave of wealthy young adults we see coming through. Emma’s tennis ability, heritage and language skills mean her wealth is likely to exponentially grow, especially as she is able to simultaneously identify as Romanian, Chinese, Canadian and British and therefore appeal to significant and varied markets. It’s not just Emma that is experiencing a financial change – the FT reported that an estimated 5.2 million people became dollar millionaires in 2020, demonstrating that times of trouble present opportunities just as they present challenges.
Sportspeople will generally already have good networks around them with expertise on wealth management, but that may not be the case for an entrepreneur who’s made money on PPE, or the tech-savvy individual who sells an app – to take two examples.
In the private wealth sector, we’re supporting more and more young people and entrepreneurs whose endeavours have generated significant wealth and want to understand not only how to preserve and grow their wealth but also how to hold their wealth responsibly.
The most important conversation we can have with a newly wealthy person is about apportioning wealth not just for now but to factor in future growth. We need to ensure that we understand what proportion of that person’s wealth is essential for them to preserve, what proportion may be needed by them for growth and new businesses, and also the element that they consider to be ‘freely disposable’. That freely disposable pot may be used for tax efficient succession planning or environmentally friendly impact investment or even into projects focusing on the redistribution of wealth and it is our job to ensure that the advice they receive, and the structure that holds their wealth, is fit for their specific purpose and interests.
Emma Raducanu is an example of a young person with a significant public profile who will likely be aware that she can multiply her wealth many times over thanks to the value of her brand. Indeed, her lawyers have already trademarked her name. But money can be used for greater effect or impact when it’s sensibly structured or apportioned; and this will be a familiar conversation for many of our islands’ wealth managers.
