Liam Cotter’s childhood dream was to become a millionaire. He dreamed of retiring before turning 60, pursuing his passion for marathons and music, and supporting himself with the income he earned from his lifelong savings.
But for years his goal seemed out of reach. The Irish accountant worked for the Kerry Group, one of the country’s largest multinational corporations, for more than a quarter century, amassing a pension and several rental properties. However, his past personal investments in gold and dot-com stocks have failed, and he needs professional investment assistance.
“I wanted a platform [to invest] “I want to worry less, not more, especially after retirement,” says Cotter, 57, at her home in the southern city of Cork. Having lived abroad for a long time, he was now based in Ireland and sought advice on his hometown.
This breakthrough was unexpected. Besides his business, Kotter also worked as a fitness trainer. One of Cotter’s clients, an investment advisor, helped him consolidate his assets, especially as he cut jobs in 2021. “He convinced me there was another way,” Cotter says. “Just wishing you the best in your employer-provided pension fund” is never enough.
Ireland’s newest wealth management company, Unio, backed by Canadian insurer Great West Lifeco, was launched in April to meet the burgeoning industry demand for managing wealth in Ireland. Unio has acquired Mr Cotter’s clients’ businesses and two other wealth management groups and manages €15 billion in assets, of which two-thirds is in the pension business and the rest in assets.
Mr. Kotter now works for the German chemical company Brentag and has invested between €2.5 million and €3 million worth of assets in Unio.
When Ireland joined the EU in 1973, it promised its ticket to prosperity. However, poor economic performance in the 1980s left almost one in five people in the labor force unemployed, and many workers (including newly graduated Cotter) sought a better future abroad. Immigration surged.
Good times came in the mid-1990s with a manic real estate boom. It ended in a banking industry collapse that resulted in a recession and brutal austerity measures.
The country’s fortunes have once again turned around dramatically with corporate tax benefits from a small number of multinationals. The corporate tax has ballooned public coffers, distorted EU growth data and prompted Dublin to prepare for the creation of a sovereign wealth fund to deal with a budget surplus expected to hit. €65 billion from now to 2025.
Former Credit Suisse executive and Wealth Evolution podcast host Mike O’Sullivan, strategy adviser to Unio, says ancient Celtic nations are ‘old nations with new economies’ based on growing prosperity .
Consulting firm PwC expects Ireland’s assets under management to grow from €3.66 trillion in 2022 to €6 trillion in 2027, corresponding to a compound annual growth rate of 10.3%. This compares to 2.6 percent and 2.2 percent respectively for the United Kingdom and the Channel Islands/Isle of Man over the same period projected by the Boston Consulting Group.
According to Credit Suisse, there will be 176,000 people in Ireland with assets (including real estate and financial assets) of $1 million or more in 2021, a figure that has increased more than 2.5 times over the past decade. In addition, the country has nine billionaires with net worths of more than $37 billion, according to Forbes magazine’s World Billionaires List.
“Our business has grown exponentially over the last five or six years…Thirty years ago Ireland didn’t really have that much wealth, but in the last 10-15 years that has changed dramatically. ‘, said Keith Ryan, head of Ireland at Julius Baer, Switzerland’s second-largest bank that manages multimillion-dollar personal fortunes. Asset Euro. “In the context of our recent history, it’s amazing how Ireland looks and feels in terms of wealth.”
He said the country’s changing fortunes were not only driven by strong economic growth based on the international investment Ireland attracted, particularly the technology and pharmaceutical industries. [to] Genuine entrepreneurship is thriving. ”
Keith Ryan, Ireland representative for Julius Baer
According to Credit Suisse data, the country’s total wealth per adult has doubled since 2000 to an average of $251,337 per person, higher than Italy, Japan and South Korea, and just below Germany’s $256,985. only slightly.
Ireland is a country of avid savers. The latest official figures show that the savings rate fell to pre-pandemic levels in the first quarter, but still accounted for 14% of gross domestic income, according to the Central Statistics Office (CSO).
According to Peter Culhane, a statistician in the CSO’s National Accounts Analysis and Globalization Division, Irish households are still saving more than they spend, “and are still adding substantial savings, adding wealth at a slower pace.” It’s just increasing.”
Many increasingly wealthy Irish are putting their savings into bank deposits or buying and upgrading properties, the CSO said. Financial investments are only a fraction of people’s wealth. “Our competition is cash and the housing market,” said O’Sullivan.
In the past, people with wealth of $1 million or more turned to big financial centers such as London and Switzerland for wealth advice, but the number of Irish people with ample income not tied to real estate is increasing, so there are more opportunities to grow your assets. domestic industry. Ireland’s largest wealth management group is Davie, now owned by the Bank of Ireland (BoI). The bank, Ireland’s largest asset bank, will buy the financial company for €427 million in 2022.
BOI CEO Myles O’Grady told the Financial Times that wealth businesses, including pensions, investments and insurance, are “a key part of our strategy and a source of business growth”. Ta. Strong net inflows pushed assets under management up 7% to 42 billion euros in the first half of the year, with Mr O’Grady stressing that “you don’t have to be rich to own an asset product”.
Some people report an increased appetite. “What we have seen over the past few years is an increase in demand for these services. It’s because the wealth is accumulating in this country, whether it’s in terms of financial planning.” Acquired by the Royal Bank of Canada last year in a €1.8 billion deal, RBC Brewyn Dolphin manages around €4 billion in assets in Ireland.
Quigley said clients were more focused on real estate during the Celtic Tiger boom of the 1990s, adding that long-term financial planning and building diversified portfolios began in earnest since the financial crisis. Ta.
In the three years since Ireland’s economic boom stalled in 2008, national income has fallen by 17%. Cotter said the Celtic tiger’s death “has left a scar on the Irish people”. When people see things improving, they inevitably fear that everything will end in tears again. ”
But it also has concentration. “It made people realize that real estate, like any other asset, can go down, especially when heavily leveraged,” said Suzanne Cassin, a financial planner at Brewin. talk. . . This sort of resets how people view wealth management and how they should invest their assets for maximum return. ” as a result, “[having a trusted] Trading partners have become really important. . . People loved that personalized approach,” she added.
Cotter says: “I don’t have anything special. Maybe that’s why I need someone who is an expert in this kind of thing and I can trust because I feel there’s a big risk in this,” he said. With 75% of my portfolio invested in medium-risk assets (mostly stocks, bonds, and some cash), I haven’t been tempted by cryptocurrencies in the slightest.
In addition to ambitious Irish investors like Cotter, continental clients are also on the rise as Brexit restricts what UK-based wealth managers can do to seek business in the EU. and EU-based British investors are also looking to Ireland.
Asset managers say London has long been the center of wealth management in European time zones, but Ireland is an English-speaking country, part of the EU and has a common law system. The business is rapidly getting back on track.
Brewin Dolphin’s Quigley has also seen a surge in the number of customers in continental Europe. “That’s been the catalyst . [to the business]’ he says.
Overall, the industry is experiencing rapid growth. Mr Ryan said Julius Baer has grown its assets under management in Ireland at a compound annual growth rate of 30 per cent over the past five years, a trend that has continued this year. Business expansion has more than doubled headcount and the bank moved into a new office in central Dublin in July.
“In Ireland, there wasn’t a lot of wealth that could be transferred, so there wasn’t a lot of intergenerational wealth,” Ryan added. “Majority of our expansion has involved divestments by the first generation of young entrepreneurs . Remarkably, the real estate sector has not been a large variable in wealth growth, which contrasts dramatically with the Celtic Tiger era.”
Irish people have a lot of income to invest in, but the withdrawal of some big companies from the Irish stock market, such as building materials group CRH, has highlighted the fact that domestic investment opportunities are limited. CRH will cease trading in Dublin as part of switching its primary listing from London to New York. As a result, wealth managers generally focus on global investments.
But they hope that Ireland’s growing personal wealth can be used to stimulate the domestic private equity and venture capital industry. For Unio’s O’Sullivan, “the challenge is to educate people and make them think that wealth is the engine of the economy.”
Venture capital as a means of boosting entrepreneurial success is “still untapped or underdeveloped,” Ryan said. I think we need to look at regimes such as the US and the UK and how we can encourage the wealth created so far and invest in the next wave of startups. ”
And a new generation of Irish investors are looking for sustainable investments, O’Sullivan said. “The idea is that the client base will have a modern and sophisticated portfolio of personal assets that they probably wouldn’t normally have access to.” For Kotter, access to such investment platforms is crucial. is. Without it, he believes only a fraction of those benefiting from Ireland’s booming economy would “be able to find pots of gold at such an opportunity”.
Ireland’s rapidly growing population, strong corporate tax revenues and ability to attract investment bode well for the industry. “I’m optimistic that what we’ve been through in the last few years isn’t over the top,” Ryan says. “This has the right lifespan.”
This article is part of FT Wealthphilanthropy, entrepreneurs, family offices, alternative and impact investing.
