Stealth Wealth

Private jet sales are slowing and yet there are more private jets in the air at any one time than ever before

Throughout the 80’ and 90’s the ultimate status symbol was the private jet. Owning one sent out a clear message to peers and public – My business is global, my time is precious and I am a success. Only now are we beginning to witness the unravelling of complex, and in some cases illegal activities that fuelled the private jet set of the nineties and early noughties. Bernard Madoff would have been the toast of the party until he was arrested, as would Allen Stanford and Fred Goodwin. Their jets were essential tools in maintaining a global business and fuelling client perception that these were folks to do business with. Their respective and high profile downfalls were almost certainly key to  a more understated elite.

As we roll headlong into yet another inquiry around alleged wrongdoing at Barclays, and a host of other investment houses, it seems that the tide is starting to turn after a decade of blatant excess. This was corporate behaviour that appeared out of control. Generating wealth at any cost where anything and everything could be bought, up to and including government, CEO’s and, allegedly, even the police. In the time following the global crash of financial markets, we have seen increasing moves to reign in gung ho attitudes. In the years of the .com boom, we saw very public displays of wealth and affluence. Whole industries exploded in what was pretty much a money no object economy. As the wealth rolled in, morals, judgement and plain economic common sense rolled out. In hindsight we know that control was thin on the ground. Understanding at senior levels around complex financial instruments was at best limited. To voice concern would also be to endanger your bonus.

Alongside an explosion of wealth and excess came a vast leap forward in social networking media. Internet darlings such as Twitter, Facebook and LinkedIn flung open the doors of privacy and for the first time in history allowed the public a global platform upon which to publish concerns, views and facts. The net result allows very public judgement and scrutiny of all manner of events and actions be it personal or corporate. Concepts such as Big Brother brought out the voyeurism in our nation and as a result it now seems perfectly normal to post previously private thoughts, moments and facts to a worldwide audience.

It is almost certain that the  power of social media has given rise to the worlds elite toning  down images of excess. The “loadsamoney” behaviour brilliantly captured by comedian Harry Enfield has become crass and essentially unacceptable as policed by social media.  It seems only yesterday that captains of industry could be witnessed hopping off their superyacht tenders in St Tropez with trolley loads of Kristal to spray rather than sip. Such behaviour in 2012 would be captured on a mobile, posted on Twitter and suddently 20,000 followers become your very own personal jury. In 2006 those very same captains of industry would have been applauded and viewed as inspirational.

Since the banking crash of 2008 we are now in an age of “stealth wealth”, where ultra high net worth consumers will go to great measures to remain discreet. Furthermore this negative judgement associated with flambouyant displays of wealth doesn’t just originate from the“have nots” in our society. Senior politicians and even presidents have voiced their opinions with Barack Obama accused by Fox News’ Charles Payne of “demonising success” and “attacking the wealthy” , whilst our very own Prime Minister made a rare departure and personally attacked Jimmy Carr for using offshore tax schemes to minimise tax payments.

Such scrutiny has forced billionaires to fly below the radar and avoid the media and authorities at all cost. Of course the usual suspects still “tweet” photos of themselves on board jets, yachts and helicopters, though for the most part discretion is key. In line with toned down displays of excess, luxury brands are moving to bring more subtlety to their product ranges. Big brash brand names are gone in favour of plainer, less heavily branded styles.

Alongside political and media scrutiny, the green revolution has also added to the demise of that old saying “if you’ve got it flaunt it”. Public perception associated with gas guzzling supercars and yachts is almost enough to have the UK’s elite reaching for the tube pass. According to MD of Digital consultancy Nucleus, “Luxury consumers are far more self conscious about their consumption than they were before the financial crisis.”

Private wealth and corporates go to extraordinary lengths to hide big ticket purchases such as private jets, helicopters and yachts. Using shell companies and off shore registers make it difficult to track the ultimate owner of luxury big ticket assets. Even where jets are listed as owned by a corporate entity the split between personal and corporate use is, in many cases, questionable. UK based air charter company Execflyer  have recently witnessed an increase in new clients entering the air charter market having previously owned their own aircraft. Such clients aren’t necessarily all looking to reign in on leverage, or address short term cash flow. For the most part they are toning down, removing key assets from the balance sheet and working the “money harder on other projects.”

So what has really changed? Has public perception and scrutiny become a key driver in altering high net worth behaviour, or are their other factors at work such as rapidly declining asset values and market lethargy? The reality is surely that the whole world has come to realise that the bull ride is finite and that the small print outlining that “your investments may go up or down in value” is true after all. Fund managers previously trusted to handle hard earnt pension pots are now suspiciously viewed as no higher than your average BetFred punter. The will to impress has been extinguished as big ticket material acquisition doesn’t necessarily equate to success, but the niggling doubt that maybe peers are wondering which Ponzi scheme funds such extravagance?

On the inside not a lot has changed. Private wealth still fly on business jets, as do the corporates. From the outside looking in much has changed. Chartering yachts and aircraft on an ad hoc basis allows the user to distance themselves from the extravagance whilst only paying for the time spent on board. It allows individuals to blur the source of the extravagance as the source of the funds that pay for charter is difficult to track. To brush aside ownership of a super yacht is difficult, though to admit to spending £250k GBP to charter a similar specimen is certainly more acceptable. Reputations are made and shattered in fractions of a second in this digital age and this must surely not have gone unnoticed amongst a more subdued jet set.