‘I’m insuring my life for £6m to protect family from IHT raid’

More business owners are seeking policies to protect their assets from ‘death tax’ for after they
have gone

A BRITISH hotel tycoon is buying a £6m life insurance policy to protect his fortune from Rachel
Reeves’s inheritance tax raid.

Steve Perez, who owns a string of upmarket restaurants and hotels in the East Midlands, as well as
the drinks company Global Brands, said he is taking the step to ensure his family will not have to
sell parts of his empire if he dies.

It comes after the Chancellor unveiled a string of changes to inheritance tax (IHT) rules during her
maiden Budget, including slashing relief for business assets.

Mr Perez said: “I’m 68 and come April next year my business potentially will have a huge, huge tax
bill.” He added that in order to keep the business going “not necessarily for [his] heirs’ benefit but
for his employees and to protect the business”, he is taking out a life insurance policy costing him
about £6m.

“I built this business up from the back of a van and we now employ 400 people in Derbyshire,” he
said. “I suspect if the business had to be sold, it would go to a foreign corporation or it would go to a
private equity type of business which wouldn’t care about the local area and employees as I do.

“Instead of investing ... into the business, I’m having to take money out ... to pay the life insurance
policy, just in case I die while these laws are in place.”

*Reeves’s rule changes to double IHT receipts by the end of the
decade*

![image](/coverage/c61.webp)

Mr Perez founded Global Brands in 1997 after creating the vodka cocktail drink VK. He later
expanded into hospitality, building the Casa Hotel and buying the Peak Edge Hotel, both in
Chesterfield. In his spare time, he is a competitive rally driver.

He is among many business owners grappling with changes to IHT rules. Previously, properties
used for business purposes could be passed down without incurring inheritance tax.

From next April, properties with a value of more than £1m will pay a 20pc rate. Bosses have argued
that the changes discourage investment, warning many family-owned businesses will be forced to
sell up if they cannot pay the levy.

Farmers in particular have been incensed by the decision to axe tax relief for agricultural properties
over £1m.

Insurers have reported a rise in individuals looking to take out life policies since the Budget. Life
assurance pays out when the holder dies, while insurance pays out if the holder dies within a
specified period.

Mr Perez’s policy will cover him for 10 years: “Should it not be changed in the next 10 years,
hopefully, we’ll get a government in, whoever it might be, who’ll see common sense.”

However, given the size of his business empire, he said his initial £6m policy would not be big
enough to pay for his inheritance tax bill if he died.

He said: “That’s the first quote I’ve had but I’m probably going to have to increase that to at least
£10m. I’ve got no incentive to grow the business now.

“Now the bigger the business grows, the more I’m going to have to pay out in life insurance,” he
said.

Hotel Tycoon Takes £6m Life Insurance to Shield Business from Inheritance Tax Hike

# Market Concentration and the “Magnificent Seven” 

The S&P 500, a key barometer of the US stock market, is currently exhibiting a remarkable degree of market
concentration. The top 10 stocks within the index now account for 33% of its total market value, significantly
surpassing the 27% concentration observed at the height of the tech bubble in 2000. This trend has been
driven largely by the "Magnificent Seven": Microsoft, Apple, Nvidia, Alphabet, Amazon, Meta, and Tesla.
These stocks have collectively amassed substantial market capitalisation, leading to a skew in the index's
performance and valuation metrics.

![image](/coverage/c101.webp)

# Dominance of Tech Giants 

The influence of these tech giants is particularly noteworthy. Nvidia alone has been responsible for 34.5% of
the S&P 500’s gains in 2024, highlighting the critical role a company can play in driving market performance.
The combined market cap gains of Microsoft, Apple, Nvidia, Alphabet, Amazon, and Meta amounted to $1.3
trillion in May 2024, accounting for 76% of the S&P 500’s total gains for the month. This underscores the
outsized impact of a few major players on the overall index.

![image](/coverage/c102.webp)

![image](/coverage/c103.webp)

# Performance Comparison: S&P 500 vs. Equal-Weighted S&P 500

The performance divergence between the S&P 500 and its equal-weighted counterpart underscores the
market concentration issue. While the S&P 500 posted a nearly 3.5% gain in June 2024, by contrast the
equal-weighted S&P 500 was down 0.7% in the month. This disparity has been consistent throughout 2024,
with the traditional S&P 500 significantly outperforming the equal-weighted index, 20.6% and 8%
respectively, through to June. Notably, within the S&P 500, the year-to-date change for the "Magnificent
Seven" stocks is 31.8%, compared to a 7.7% YTD change for the remaining 493 stocks as of June 2024.

![image](/coverage/c104.webp)

# Implications for Investors?

While the dominance of the "Magnificent Seven" has propelled the market to new heights, it also introduces
potential risks. Investors should be mindful of the implications of this concentration and consider diversifying
their portfolios to mitigate potential downturns in these influential stocks. As history has shown, the market
dynamics can shift, potentially leading to a broader dispersion of gains across the S&P 500, which investors
can benefit from. One way is to have direct exposure to the S&P Equally Weighted Index. Investors could
also look into structures that can provide them an opportunity to participate on the upside of these megacap stocks and the broader market, but can also provide some downside protection in case the recent run-up
in these names were to reverse. Of course, investors should ensure that at all times the portfolios should be
well diversified and in line with their risk profiles.

The Magnificent Seven’s impact on the S&P 500

# 1. Expect Volatility – Stay Calm

Political changes, like Trump's
inauguration, often cause market
swings. Instead of panicking, evaluate
your portfolio, assess your risk
tolerance, and maintain a balanced
investment mix to handle both rallies
and downturns.

# 2. Sector-Wise Opportunities

Trump’s policies may benefit sectors
like infrastructure, industrials, and
banks while challenging others, such as
healthcare and technology. Focus on
sectors that align with your long-term
goals.

# 3. Look Beyond Headlines

Markets don’t always react predictably
to news like trade wars or tax policies.
Emphasise strong fundamentals and
adopt to keep cash reserves to
capitalise on market dips.

# Navigating Market Uncertainty During a Presidential
Transition

A new presidency brings policy changes that may impact taxes, spending, and trade, which could
already be influencing the markets. Investors might feel both excitements over new opportunities and
concern about uncertainties. The key is to focus on long-term goals while remaining flexible to adapt to
emerging opportunities.

# Key Strategies for Managing Your Portfolio

# 1. Prepare for Volatility

Market fluctuations are typical during political transitions. Evaluate your portfolio by asking:

- Am I comfortable with my risk exposure?
- Do I have a diversified mix of investments to handle market ups and downs?

Balancing stocks, bonds, and cash can help mitigate risks and stabilise your portfolio.

# 2. Identify Sectors with Potential

Trump’s proposed policies may drive growth in:

- Infrastructure & Industrials: Investments in construction and heavy equipment could see gains.
- Financials: Deregulation and rising interest rates may benefit banks and financial institutions.
- Defensive Sectors: Utilities and consumer staples offer stability during volatility.

On the flip side, healthcare and technology may face regulatory challenges. Assess opportunities aligned
with your long-term strategy instead of chasing trends.

# 3. Focus on Fundamentals

Avoid reacting to short-term news. Instead:

- Consider companies with robust earnings and resilience.
- Keep cash reserves to seize opportunities during market downturns

# 4. Build a Safety Net

Mitigate risk and add stability to your portfolio with:

- Bonds and Dividends: Offer income and stability.
- Gold and Hedges: Provide protection against inflation and market declines.
- Regular Rebalancing: Review your portfolio semiannually to ensure alignment with your goals.

# Final Thoughts

Trump’s inauguration signals potential changes for the markets, but sound investing principles remain
constant. By diversifying, focusing on fundamentals, and maintaining a long-term perspective, you can
transform uncertainty into opportunity. A steady plan equips you to navigate whatever the market may
bring.

Avoid letting politics interfere with your investing. No matter who is in charge, the market finds a way
to go forward. Like previous presidents, the market surged under both Trump and Biden.

![image](/coverage/c81.webp)

*(Source: Schwab Centre For Financial Research, with data provided by Morningstar, Inc)*

# Disclaimer

This document has been produced solely for information purposes by WealthFusion Limited with the
greatest of care and to the best of its knowledge and belief for use by its legal entities. The information
contained herein constitutes a marketing communication and should not be construed as financial
research or analysis, an offer, a public offer, investment advice, a recommendation or solicitation to
buy, sell or subscribe to financial instruments and/or to the provision of a financial service. Further,
this document is not intended to provide any financial, legal, accounting or tax advice and should not
be relied upon in this regard. The information provided herein is for the exclusive use of the recipient
and may not be reproduced, disclosed or distributed, neither in part nor in full. This document is not
directed at, or intended for distribution to or use by, any person or entity domiciled or resident in any
jurisdiction where such distribution, publication, availability or use would be contrary to applicable
laws or regulations of such jurisdictions. 

Any investment decision must be based on a prior study of the offering documentation and in
particular the terms and conditions and key information documents. This information can be obtained
on request and will be free of charge from your relationship manager. The content of this document is
intended only for persons who understand and are capable of assuming all risks involved. This
document has been prepared without taking into account the investor classification, specific
investment objectives, financial situation, tax situation or the needs of the recipient. Products and
services are not suitable for all investors and may not be available to investors residing in certain
jurisdictions or with certain nationalities. Before entering into any transaction, the recipient should
consider the suitability of the transaction to individual circumstances and objectives. WealthFusion
Limited recommends that investors independently assess, with a professional financial advisor, the
specific financial risks as well as the legal, regulatory, credit, tax and accounting consequences.
Investment products may be subject to investment risks involving, but not limited to, possible loss of
all or part of the principal investment. 

This document is not intended to be exhaustive on all risks related to financial instruments. Therefore,
the recipient should consult the specific product documentation and discuss any queries with their
relationship manager prior to entering into an investment decision. The information and views
expressed at the time of writing are subject to change at any time without notice and there is no
obligation to update or remove outdated information. Historical data on the performance of the
securities and financial instruments or the underlying assets in this document is no indication for
future performance and the value of investments may fall as well as rise. This document is based on
publicly available information and data. Although information in this document has been obtained
from sources believed to be reliable, WealthFusion Limited provides no guarantee with regard to the
timeliness, accuracy or completeness of the information and does not accept any liability for any loss
and/or damage, either directly or indirectly, arising out of or in connection with the use of all or part
of this information or from the omission of certain information. Recipients should be aware that the
terms and conditions and key information documents constitute the sole binding basis for the
purchase of investment funds. Some investments may foresee restrictions to target group of investors.

What Does Trump’s Inauguration Mean for Your Portfolio?

# Introduction

As we approach September 2024, a significant shift in the financial landscape looms large. The Federal Reserve, having spent much of the past few years hiking interest rates to combat inflation, is now expected to pivot toward cutting rates. This change could open new opportunities for investors, particularly in the realm of high-yield dividend stocks. Historically, rate cuts have had a profound impact on various asset classes, and high-yield dividend stocks have often emerged as winners compared to more traditional income vehicles such as bonds and certificates of deposit (CDs).

Companies with a constant and reliable source of income in the form of dividends do well over the long run. These companies are particularly attractive to investors seeking a combination of regular income and capital appreciation. In the environment that lies ahead, these stocks could prove compelling as yields from bonds and CDs drop as a result of the interest rate cuts by the central banks across the developed world. Dividends are likely to be maintained, and there is a potential for these payments to even increase.

# Empirical Evidence: The Case for Dividend Stocks

High-yield dividend stocks, known for their above-average payouts (often in the range of 4% to 8%), have long been a cornerstone for income investors. These stocks tend to hail from sectors like consumer staples, real estate, and utilities, as the companies in these sectors are more mature and have more reliable cash flows. When interest rates fall, as expected in September 2024, the relative appeal of these stocks should increase.



![image](/coverage/c41.webp)

Empirical evidence shows that the companies that distribute regular shares of their income to shareholders
tend to register higher value over the long term. These regular income streams are particularly valued by investors
when market conditions get tough, as dividends can help absorb some price volatility. Many established companies with a long history of paying dividends also have been shown to provide growth in those dividends. This growth not only protects against inflation but also allows investors to enjoy a rising income stream.

More generally, dividend-paying stocks have historically exhibited lower volatility than the broad equity market,
especially in times of economic uncertainty. By construct, these high dividend-paying stocks often operate in mature, defensive industries that are less exposed to economic cycles and have more stable cash flow profiles. Also, by committing to stable and growing dividends, management signals confidence in their future, enhancing stock price prospects. Moreover, a progressive dividend policy acts as a disciplinary factor, as any surplus cash must be prioritized to return to shareholders before it can be used for non-core or risky endeavours by management.

For example, the S&P 500 Dividend Aristocrats Index. —companies that have consistently increased their payouts for at least 25 consecutive years. These stocks have historically outperformed fixed-income investments during periods of falling interest rates. In a lower-rate environment.

# Why now?

As the Federal Reserve embark on its rate cutting cycle, the yields on bonds and CDs are set to fall. For instance, following a 50-
basis point rate cut, a one-year CD that currently yields 4.5% could drop to around 4% or even lower. Similarly, yields on Treasury
bonds are expected to fall. In such an environment, high-yield dividend stocks can offer yields that surpass those of CDs and
bonds. For example, a stock with a 5% yield remains attractive when bond yields drop below 4%. Even in a lower-rate
environment, these stocks can continue to deliver competitive income, making them a more appealing choice for investors
seeking yield.

The dividends also have a unique advantage: they can grow over time. Businesses can raise their prices in response to higher
inflation, leading to increased revenue and, that in turn, can lead to dividend growth. In contrast, bonds generally offer fixed
payments, which do not adjust for inflation. As a result, dividends can help protect the purchasing power of investors in an
inflationary environment.

Moreover, high-yield dividend stocks offer the potential for capital appreciation. When interest rates decline, stock prices
generally rise. This is particularly true for sectors like utilities and real estate, where companies benefit from lower borrowing
costs. As companies become more profitable, their stock prices often increase, providing investors with the opportunity to earn
not only from dividends but also from capital gains. This is a key differentiator from fixed-income products like bonds, where
typically capital appreciation is limited in most cases.

Certain sectors tend to thrive in a declining rate environment. For example, real estate benefits from lower borrowing costs,
boosting demand for properties. Similarly, the financial sector sees increased financing opportunities for both businesses and
individuals. Consumer discretionary stocks also gain from reduced borrowing costs, leading to higher spending on big-ticket
items like homes and cars. As demand for loans grows, bank stocks become even more appealing in such an environment,
making these sectors attractive for dividend-seeking investors.

# Final Thoughts: The 2024 Outlook for High-Yield Dividend Stocks

As we move toward a lower interest rate environment in September 2024, high-yield dividend stocks stand out as an attractive
investment option. With the potential to offer higher yields, growing dividends, and capital appreciation, they provide a
compelling alternative to bonds and CDs. Companies that have a consistent and reliable source of income, in the form of
dividends, tend to do well over the long term. These stocks are particularly attractive to investors who are looking for a
combination of regular income and capital appreciation.

![image](/coverage/c42.webp)

We believe, when seeing such investments, investors should focus
on companies with above average dividend growth potential with
solid balance sheets. The focus should also be on the quality of the
running income via earnings growth that will underwrite current
dividend payments and future payments. Overall, the emphasis
should be on defensive qualities, which should provide additional
financial headroom in a downturn. High-yield dividend stocks offer
investors flexibility from a reinvestment perspective. Dividends can
be reinvested into additional shares, allowing for the compounding
of returns over time without the need for additional capital. This
strategy can help investors accumulate more shares and increase
their income over time, making high-yield dividend stocks a
compelling choice in a lower-rate environment.

While bonds and CDs remain safe and stable options, their fixed returns may struggle to keep pace with inflation and potential
dividend growth, especially in a falling-rate environment. Hence, for investors seeking both steady returns and the opportunity
for growth, they ought to look for a selection of high dividend paying stocks could offer superior total returns over the medium
term.

# Disclaimer

This document has been produced solely for information purposes by WealthFusion Limited with the greatest of care and to the best of its knowledge and
belief for use by its legal entities.

The information contained herein constitutes a marketing communication and should not be construed as financial research or analysis, an offer, a public
offer, investment advice, a recommendation or solicitation to buy, sell or subscribe to financial instruments and/or to the provision of a financial service.
Further, this document is not intended to provide any financial, legal, accounting or tax advice and should not be relied upon in this regard.

The information provided herein is for the exclusive use of the recipient and may not be reproduced, disclosed or distributed, neither in part nor in full.
This document is not directed at, or intended for distribution to or use by, any person or entity domiciled or resident in any jurisdiction where such distribution, publication, availability or use would be contrary to applicable laws or regulations of such jurisdictions.

Any investment decision must be based on a prior study of the offering documentation and in particular the terms and conditions and key information
documents. This information can be obtained on request and will be free of charge from your relationship manager.

The content of this document is intended only for persons who understand and are capable of assuming all risks involved. This document has been
prepared without taking into account the investor classification, specific investment objectives, financial situation, tax situation or the needs of the recipient.
Products and services are not suitable for all investors and may not be available to investors residing in certain jurisdictions or with certain nationalities.
Before entering into any transaction, the recipient should consider the suitability of the transaction to individual circumstances and objectives.
WealthFusion Limited recommends that investors independently assess, with a professional financial advisor, the specific financial risks as well as the
legal, regulatory, credit, tax and accounting consequences. Investment products may be subject to investment risks involving, but not limited to, possible
loss of all or part of the principal investment. This document is not intended to be exhaustive on all risks related to financial instruments. Therefore, the
recipient should consult the specific product documentation and discuss any queries with their relationship manager prior to entering into an investment
decision.

The information and views expressed at the time of writing are subject to change at any time without notice and there is no obligation to update or remove
outdated information. Historical data on the performance of the securities and financial instruments or the underlying assets in this document is no
indication for future performance and the value of investments may fall as well as rise. This document is based on publicly available information and data.
Although information in this document has been obtained from sources believed to be reliable, WealthFusion Limited provides no guarantee with regard to
the timeliness, accuracy or completeness of the information and does not accept any liability for any loss and/or damage, either directly or indirectly, arising
out of or in connection with the use of all or part of this information or from the omission of certain information.

Recipients should be aware that the terms and conditions and key information documents constitute the sole binding basis for the purchase of investment
funds. Some investments may foresee restrictions to target group of investors.

Dividend Stocks – potential to Outshine Bonds in a Low Interest Rate Environment

# Introduction

Since November 2023 US stocks have rallied almost 30% until the recent drawdown that started in
early April. The S&P 500 was down as much as 5.5% in April before the last week’s bounce.
Growth-sensitive Nasdaq Index was down nearly 8%, while small-cap stocks were down by a similar
amount in April.

By contrast, traditional safe-haven asset gold is up over 5%, even as US government bonds sold off.
Yields on the 10-year US Treasury have risen to about 4.6% from under 4.2% in March as investors'
price-in for fewer Fed rate cuts for 2024. It is entirely normal for corrections of this magnitude in bull
markets, especially after the rally we have seen in the past few months, and the pullback is still
modest.

The big question for investors today is whether this is just a mid-cycle correction or a harbinger of
broader correction risk assets. To assess this, we must look at the factors that triggered the market
correction in April and how long they are likely to persist.

To us, three main factors are behind this correction. The first and perhaps the most significant of all
is the higher-for-longer back into foray after a series of hotter-than-expected inflation prints as well
as stronger economic data in the US. Ongoing geopolitical tensions in the Middle East have
contributed to the already fragile sentiment. A more nebulous and perhaps a bit contentious third
factor is investor positioning and euphoria around AI-related stocks since the start of the year. 


# Higher-for-longer is driving bond yields higher 

The recent economic data in the US has been stronger than expected. At the same time, Inflation
data has not eased as investors were expecting. Both these factors have forced the Fed officials to
change their tone with regard to the future path of interest rates. In January, the investors were
expecting the Fed to cut 3-4 times this year starting as early as June. This, however, has now been
cut back to just one or two rate cuts this year starting in November/December. 


As a result, bond yields in the US have risen across the board since late March. This rise in bond
yields in a short period is putting pressure on equities, particularly on growth-sensitive stocks.
Investors are also concerned that with sticky inflation and strong economic data, the Fed may have to
hike again in 2025. To us, the likelihood of that is low unless there is a sustained re-acceleration of
inflation, which we don’t see at this stage.

The upshot is that we do not see bond yields in the US rising much further from their current level.
The 10-year yield could temporarily move towards a 4.75% area, but we don’t see them spending
much time around there, as softer economic data takes hold. In fact, Q1 GDP estimates last week
have come much lower than expected. We believe yields will ultimately trend lower in the second half,
and by Autumn we could see most of the current rise being unwounded. However, for yield to go back
below 4%, we would need to see a significant deterioration in the economic data and inflation to slow
down materially from here.

All in all, we expect yields to moderate from their current levels (4.65%) as both growth and inflation
will eventually moderate. Consumer spending will ease as the year progresses. Rental inflation which
is roughly a third of the CPI basket is likely to ease in the second half. Finally, as the labour market
balance improves wage growth should continue. All these make the threat of an inflation reacceleration a low risk. However, we may not see more than one or two rate cuts for this year.

# Ongoing Tensions in the Middle East

Heightened tensions between Israel and Iran have triggered turmoil in global markets. What initially
began as an airstrike has rapidly evolved into a precarious standoff, with both sides exchanging
threats of retaliation. Investors worldwide are gripped by anxiety, leading to widespread uncertainty
and market instability. Israel’s airstrike in early April targeting Iranian military officials has further
escalated tensions, with Iran vowing to retaliate and Israel fortifying its defences. The conflict has a
few implications for the global economy:

**Market Turmoil:** Global markets are feeling the strain. Oil prices had risen over $90 per barrel in
early April, signalling fears of supply disruptions. However, prices have retreated since then. Global
stocks have taken a hit and uncertainty is forcing investors to rethink their strategies as consumers
and businesses hold back on spending and investments.

**Impact on Oil:**there is an increasing fear that Iran’s control of the Strait of Hormuz, a critical oil
passage, could disrupt the oil supply, leading to higher energy costs globally. Although the risks of
this happening have subsided in the past few weeks, however, if Iran were to cut the supplies
through the Strait it would send a significant shock through the oil market. Under that scenario, we
could see oil prices well above $120.

**Rise in gold prices:**gold prices are on the rise as investors seek safe-haven assets amid
uncertainty, driving its value up as a hedge against heightened volatility.

**Inflation and Interest Rates:** Rising oil prices would hamper central banks’ efforts to manage
inflationary pressures around the world. Although the likelihood of this happening is low, but if we
see a sustained reacceleration in inflation the Central Banks will be forced to raise rates or delay the
rate cuts into 2025.

# Investor Euphoria around AI Stocks 

Since the start of the year, there has been a growing interest in generative artificial intelligence
amongst investors. This is evident from increased internet searches, media coverage, and
discussions during the recent quarter earnings calls from the companies. As a result, AI-related tech
stocks such as NVIDIA, AMD, TSMC, and other semiconductor names have rallied significantly this
year. However, the real test is whether AI stocks can live up to these elevated earnings expectations
and will be a key focus for the Q1 earnings season..

# Good start to Q1 earnings 

We are in the midst of Q1 earnings season. It is still early with nearly a quarter of the S&P 500
companies reported to date. So far, the results have been good with the majority of big technology
companies including Tesla, Microsoft, Meta, and Alphabet (Google) all delivering good earnings
resulting in a significant rebound in share prices in the last week. Arguably, earnings expectations are
still high, particularly for the tech sector and stocks have rallied sharply in the first quarter to reflect
this. That said, from the results we have seen so far, we don’t see major downward surprises on the
card for this earnings season.

# Conclusion

Summing it all up, we believe that the negative reaction in April has been largely due to the factors we
discussed above, i.e. risks around inflation, rising bond yields, and ongoing geopolitical tensions in
the Middle East. Recent economic data has been strong in the US. Rebound in other major
economies is also a tailwind to the global macro backdrop. Central banks will embark on their rate
cutting rates cycle this summer with the ECB starting as early as June and the Bank of England likely
to follow soon after. The Fed in the US will likely start cutting rates towards the end of this year. This
we believe is supportive of risk assets over the medium term, and we see the April correction as an
air pocket in the ongoing recovery in the market.

Market Correction – What is Ahead for Investors!

"If you don't do the personal work of
really acknowledging your privilege,
understanding your responsibility to
redistribute away resources and your
power - and so sometimes acknowledging
the fact that you're not the best person to
make those investment or philanthropic
decisions - then, of course, the whole
thing doesn't work."


“Unfortunately for some other of my relatives who received the
money, ended up corrupting their lifestyle and also their mental
health, so it wasn't good for them, and that money was wasted."

Some $90 trillion
(£69 trillion)
will be transferred to
American millennials

"I hope that they will be angry at me
when they're teenagers for not
having given enough money away,
as opposed to not having given
enough money to them."

# Young millionaire heirs are giving away their fortunes
to worthy causes, instead of living a life of luxury.

When Paolo Fresia inherited tens of millions of
pounds following his mother's death, it was "a
blessing and a curse".

At first, he simply acted as though it wasn't
happening. Then just 22, "my focus was to run away
and pretend that that didn't exist," he says.

"Unfortunately for some other of my relatives who
received the money," - hundreds of millions split
between them, from the family vermouth company
fortune - the windfall "ended up corrupting their
lifestyle and also their mental health, so it wasn't good
for them, and that money was wasted."

The young and very, very wealthy, it transpired, "are
not the people probably best suited to steward it".

It is for this reason 36-year-old Fresia, who lives in
London, has joined Patriotic Millionaires UK - a
group designed to help the rich give away their
money.

With millennials set to inherit huge fortunes - and
current millionaires giving away less than ever -
younger adults are seeking new ways to part with
their cash.

Finding out you're set to inherit a windfall isn't the
magical Hallmark moment many might expect, Fresia
says. As well as dealing with the trauma of the death
that has inevitably accompanied it, often the young
"don't want to come out as wealthy to your friends".

And so, he ignored his fortune, working for Médecins
Sans Frontières in sustainability, before realising
some of the company's investments didn't align with
his beliefs.

Things came to a head when Fresia reached his
mid-20s. "I really said, 'Ok, I can't run away from it
anymore. I’ve got to do something about it" and he
began looking into ways his money might make a
difference. He had been working for a family firm
when he began enquiring about where his money
might be put to good use.

He was pointed in the direction of networks like
Patriotic Millionaires, which guide people who would
otherwise have no idea how to spend their large sums.

"Life became a lot easier because there are incredible
advisers that you can pay to give you advice. But in
the end, the buck stops with you," he adds.

> "If you don't do the personal work of
really acknowledging your privilege,
understanding your responsibility to
redistribute away resources and your
power - and so sometimes acknowledging
the fact that you're not the best person to
make those investment or philanthropic
decisions - then, of course, the whole
thing doesn't work."


Antonia Mitchell, director of a Philanthropy firms,
says that around 40pc of her clients are under 40,
typically seeking her help to spend away family
money, rather than their own.

Some $90 trillion (£69trillion) will be transferred to
American millennials, with 94pc of the wealthiest
fifth of households in the UK set to leave a bequest,
according to figures from the Resolution Foundation.

> “Unfortunately for some other of my relatives who received the
money, ended up corrupting their lifestyle and also their mental
health, so it wasn't good for them, and that money was wasted."

Yet, unlike their parents, younger generations are
most keen to spend on what Mitchell calls
"destitution issues", such as refugees, gender or race
matters, those affecting the LGBTQ+ community,
"and medical research in which, interestingly, they
include mental health - which is in stark contrast to
their parents who tend to avoid it,"

Mitchell adds. "A lot of these issues tend to be tricky
to navigate between their generation and the older
generation who have radically different views," she
explains. Fresia says that among his age group and
below, some wealthy people "do feel really guilty,
especially when the history of their wealth is in
industries that are a little bit more controversial, like
weapons or oil and gas - and it's understandable, of
course.

> Some $90 trillion
(£69 trillion)
will be transferred to
American millennials

"But it's about switching that to being more
action-oriented and saying: 'the money was earned in
this way. How can you have a clear reparations plan
to make good all the negative impacts that money
might have made while being made, and then moving
on to redistributing it?' I operate under that mindset.

In typical millennial style, discussions over how to
give away large sums often happen via dedicated
retreats where attendees, clad in "Tax the rich"
T-shirts, visit workshops to confront their "wealth
shadows" - the physical embodiment of the anguish
their fortune has wrought.

Online networks also play a big part, as does social
media. Many groups have formed too, including
Donor Revolt and Resource Generation, all dedicated
to helping the young syphon off inherited cash. The
methods people choose can be somewhat
unorthodox. Last year Marlene Engelhorn, a
32-year-old from Vienna, announced that she would
be distributing the £21.5m she received from her
grandmother's pharmaceutical empire to 50 recipients, who would be selected based on the
suggestions from the 10,000 letters she posted out to
fellow Austrians, which asked who they thought
would be most deserving.

Mitchell says that "giving is easy, giving well is hard,
and as they start realising that giving well is difficult,
that's when they call me’’. 

Her client with the smallest fortune is giving away
£60,000; the largest, £1.5m. "I do see a lot of tension,"
she adds of the family dynamics that ensue - either
because parents see their child's giving intentions as
the rejection of a gift, or relatives disagree over where
money should go.


Mitchell has one client who grew up on the edges of
poverty, "Did really well for himself, and his children
have grown up in private education... How does he
then teach his children the values that have been
central to his success?" she says. Financial and social
responsibility can be difficult things for rich kids to
learn: "Philanthropy is all about your moral compass."

How, or perhaps what, to tell children is a perennial
conundrum among many wealthy families. Mitchell's
past clients have included the offspring of an
entrepreneur who "hadn't realised how wealthy the
family was, and then it all came out in the media. And
for them that was quite traumatic and quite stressful...
they'd read so many articles about rich people doing
bad things, and they didn't want to be part of that."

With some of the youngest inheritees now having
children of their own, these quandaries are becoming
more acute. The question is "really on my mind these
days, actually," Fresia says of his four and
six-year-old.

> "I hope that they will be angry at me
when they're teenagers for not
having given enough money away,
as opposed to not having given
enough money to them."

![AI Diagram](/coverage/c11.webp)

*“Beyond the money, clarity, I think, is the biggest gift I can
give them, because I did not have that. I really didn't"*

He admits, however, that "I'm not a super frugal
saint." His children go to private school, the family
goes on nice holidays, and while he is a "huge admirer" of people like Engelhorn, he says he is "not as
brave as them". His risk tolerance has fallen since his
invested in good causes).

He feels that his own generation, and the one they
have borne, will have a very different experience of
inheriting wealth. "A lot of what was happening in
previous generations is that because of this paradigm
of accumulating and preserving, the younger generation was shielded from knowing how much they were
going to inherit and what the money was for," he
explains.

"Whereas we are going to be very clear with our
young children about the fact that this wealth, especially because it was inherited, is not for the purpose
of living an overly luxurious life’’. he says. Rather,
Fresia wants his children to learn that the money
should be viewed *for the purposes of being a good
steward of it and redistributing it"

Beyond the money, clarity, I think, is the biggest gift I
can give them, because I did not have that. I really
didn't".

Where Wealth Meets Wisdom.

Hotel Tycoon Takes £6m Life Insurance to Shield Business from Inheritance Tax Hike

The Magnificent Seven’s impact on the S&P 500

What Does Trump’s Inauguration Mean for Your Portfolio?

Dividend Stocks – potential to Outshine Bonds in a Low Interest Rate Environment

Market Correction – What is Ahead for Investors!

I Inherited a windfall - it was a blessing and a curse