Number of millionaires in the Netherlands rises for the third year in succession, reaching an all-time high
The number of millionaires in the Netherlands increased for the third year in succession in 2014 to reach an all-time high. This is one of the findings reported in Vermogend Nederland 2016 (Dutch Wealth 2016, in Dutch only), a study on private assets and high net-worth individuals in the Netherlands published by Van Lanschot today.
Richard Bruens, general manager for Private Banking and member of the Executive Board of Van Lanschot, said: ‘Wealthy individuals in the Netherlands are entrepreneurial and creative, and that is how they built their wealth. They find it important to keep up their current lifestyle. But with low interest rates on savings accounts, falling bond yields, the tax on assets levied in the Netherlands, and inflation, they, too, find that far from easy to achieve.
‘Consequently, Dutch millionaires are increasingly looking for alternative investments with attractive returns, such as private companies, raw materials, works of art or infrastructure. Moreover, high net-worth individuals increasingly take a proactive approach to managing their assets with a view to their old age and the costs of the care they need or may need.’
Dutch millionaires are upbeat about the economic outlook for the Netherlands. Seven in ten high net-worth individuals say they expect the outlook for the Dutch economy to improve in 2016. This is a strong increase in optimism among Dutch millionaires compared with the year before, when 46% said they expected to see a strengthening economy. As for their own finances, 30% say they expect their situation to improve, while another 30% expect no change. Young entrepreneurs are much more positive about the outlook for their own financial situation than older high net-worth individuals.
The information in the Dutch Wealth Report 2016 refers to the most recent figures on millionaires from Statistics Netherlands (CBS), which show that 1.4% of all Dutch households had assets of €1 million or more in 2014, the value of their own home not included. In 2006, the figure was 1.1%. Dutch millionaires held assets of €3.2 million on average in 2014, a 14% increase from the low of 2009, the year after the start of the financial crisis. The number of millionaires rose during that period from 87,700 to 107,700, an increase of more than 23%.
The study shows that many high net-worth individuals in the Netherlands have built their assets through entrepreneurship. Many started out as employees but at some point changed course, often because they had innovative ideas and plans. Once they have built a substantial asset base, Dutch millionaires’ priority then becomes to maintain those assets and their lifestyle.
As the asset base increases, the share of total assets invested in stocks and bonds also rises. On average, Dutch millionaires have invested more than 60% of their assets in stocks and bonds. Among the wealthiest of the millionaires, this share even rises to more than 80%.
By comparison: non-millionaires have, on average, invested 15% of their assets in stocks and bonds. Many millionaires witnessed an increase in total assets owing to the strong rise in share prices since the financial crisis. Non-millionaires did not: in 2014, their assets averaged €56,000, exactly the same as in 2009.
How can asset levels be maintained? This question is becoming more urgent, also for high net-worth individuals, now that the interest on savings accounts and bonds continues to decline, while assets are under pressure from the asset tax levied in the Netherlands and inflation. The study shows that, in response to these challenges, high net-worth individuals are increasingly seeking alternative forms of investment that offer attractive returns.
Alternative asset classes include privately owned companies, but also products such as whisky, wine, classic cars, raw materials, art or infrastructure. The study shows that, among those who have already committed assets to such alternative types of investment (20%), or those who are considering doing so (14%), privately owned companies (SMEs) constitute the most popular asset class (49%).
Millionaires set aside assets for a variety of purposes. The most cited objectives are maintaining the current lifestyle (75%), retirement (67%) and giving to family members (61%). One quarter of Dutch millionaires have set aside assets for charity (25%) or for pursuing hobbies (24%).
The study shows that high net-worth individuals in the Netherlands want to remain in charge of their own life and health as long as they possibly can, also as they get older or become ill. They would prefer to stay in their own home and be cared for there, and once that is no longer feasible they wish to spend their remaining years in a luxury care home.
Two-thirds of Dutch high net-worth individuals want to be in charge of the care they might ultimately need, and they are also prepared to pay and/or save for extra care. However, the necessary provisions are not yet being made. Only 18% of respondents had, over the past three years, set aside funds to pay for the care they might wish to arrange in the future. Even high net-worth individuals therefore run the risk that, ultimately, they will not be able to get the level of care they aspire to. In that case, they will have to adjust their demands or spend more of their assets on care when the day comes that they need it.
Dutch high net-worth individuals most like to spend money on travel, preferably several times a year. As is the case for the Dutch in general, France is by far the most popular destination among high net-worth Dutch nationals, with the wealthiest among them showing a clear preference for the sunny Côte d'Azur in the south. Spain, Italy, the United States and South Africa make up the remainder of the top 5 of popular destinations for Dutch millionaires. Paris and New York are the most popular destinations for a city break.
Many high net-worth individuals also express an interest in art, which is reflected in their purchasing works of art as well as visiting museums. More than half (54%) of all Dutch high net-worth individuals have a favourite museum in the Netherlands – notably the Rijksmuseum in Amsterdam, which is by far the most cited museum in this respect (22%). The Van Gogh Museum in Amsterdam, sponsored by Van Lanschot, is the preferred choice of the wealthiest among the millionaires.
The millionaires are distributed quite evenly across the Netherlands. In 2014, Statistics Netherlands counted 40 towns across the country where millionaires accounted for 3% or more of the local population. Laren, Bloemendaal and Blaricum (all three located in North Holland province) top the list, with millionaires in each of these three towns representing some 10% of the local population. Wassenaar (near The Hague in South Holland province) and Rozendaal (near Arnhem in Gelderland province) follow with 8.8% and 7.6%, respectively.
Amsterdam has the highest absolute number of millionaire residents, 5,500 in all, followed by The Hague with 2,900 and Rotterdam with 2,300. Almost all millionaires own their own home, which in 2014 had an average value of €504,000, more than twice the value of homes owned by non-millionaires.
Dutch Wealth Report 2016 is the fourth study of millionaires in the Netherlands commissioned by Van Lanschot. The study consists of two parts: the 2014 review of millionaires in the Netherlands by Statistics Netherlands, and a survey among Van Lanschot’s high net-worth clients conducted in 2015 by the research agency Kien. In addition to the research outcomes, the study offers interviews with passionate entrepreneurs as well as articles on health care and care for the elderly, and also shows what high net-worth individuals prefer to spend their money on.
The full Dutch Wealth Report 2016, Vermogend Nederland 2016 (available in Dutch only), can be accessed on www.vermogendnederland.nl.