(I liked the title I chose
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BRIAN Souter and Ann Gloag, the entrepreneurs behind bus company Stagecoach and two of Scotland’s wealthiest individuals, took just 72 hours to lose £80 million of their personal fortune.
Exactly a year ago, they announced that their multi-million-pound coach business in the United States had hit a financial flat spot. Shares in Stagecoach slid sharply over the next three days and Mr Souter and Ms Gloag - who own about 25 per cent of the Perth-based firm - saw the value of their stake shrink from about £180 million to £100 million.
According to a report on Britain’s millionaires published yesterday, their experience was no more than typical for the super-rich last year. The love affair with shares is costing Britain’s wealthy dear.
On average, about 60 per cent of their wealth is invested in the stock market. But in 2002, equities plunged for a third consecutive year. The FTSE 100 - which touched a high of almost 7,000 at the end of 1999 - has fallen by about 40 per cent since its peak. It slid by 22 per cent last year.
There are an estimated 350,000 households in the UK with assets in excess of £1 million. Between them, they suffered a financial loss of about £240 billion in 2002 - about four times the gross domestic product of Scotland.
JK Rowling is one of just a handful of wealthy Britons whose net worth has actually grown. Her bank balance is understood to have risen by about £50 million last year, to £280 million, and, as the Harry Potter books and merchandise continue to bewitch children, shares in her publisher, Bloomsbury, have soared in value.
Dozens of other prominent Scots have seen their wealth plummet. David Murray, the former chairman of Glasgow Rangers, endured a loss of about £100 million in 2002 as the shares in the football club slumped. John Menzies, 76, whose family retains a significant stake in the newsagent chain turned airline-services company, is believed to have lost £20 million thanks to the Edinburgh firm’s falling share price. And Sir Ian Wood, who has built a billion-pound oil business in Aberdeen, is thought to have seen his family’s paper wealth drop by about 40 per cent, to £400 million, solely due to the stock market.
Yet according to the authors of the report - financial management firm Boston Consulting Group - some of the losses could have been avoided. They say Britain’s financial elite suffered last year because of their obsession with shares. The typical rich German household, they point out, invests most of its money elsewhere - and has gained as a result.
Three categories of household make up the rich in Britain, according to the report:
The "established wealthy" are those who boast more than £5 million in assets;
The "emerging wealthy" enjoy material worth of £1 million-£5 million;
"Affluent" households’ assets exceed £175,000 but are no greater than £1 million.
In 2001, these three categories of families combined laid claim to about £2.4 trillion (£2,400 billion) in assets - a colossal wealth that only the financial cream in Japan and the US were able to exceed. But by the end of 2002, rich Britons had £2.1 trillion to their name. Their 12 per cent fall in wealth compares poorly to a 9 per cent gain recorded last year by the uber-rich in Germany.
Ray Entwistle, the head of Edinburgh’s Adam & Co, which banks about 10,000 affluent Scots, said their reputation for canniness may have shielded them from the worst of the slump - partly thanks to rising property values.
"Wealthy people don’t usually just rely on a stock and share portfolio," he said. "They’re also in property, and they might have invested in fine art and antiques. If you’re in the right kind of property you’ll have done quite well in the past year. Commercial property has been quite strong and, if you own a house in the country within about an hour of Edinburgh and Glasgow, there is still a massive demand."
But for Britain’s affluent households, the downturn has been severe - about 20 per cent in 12 months. For the "emerging wealthy" it has been even more painful: 32 per cent.
So are the rich in any danger of running out of cash?
Kevin Mcleod, who runs Bank of Scotland private banking, said no, adding: "From our experience, the wealthy have managed their finances with no problems. Whether moving to protect themselves or funding losses, we haven’t seen clients having problems with liquidity".
And the best investments? Ian Gregg, whose family runs the bakery chain, saw his wealth rise by several million last year to £80 million. Arnold Clark, the man behind Scotland’s biggest car dealers, also enjoyed a healthier bank balance. And the Wiseman household, whose dairy business goes from strength to strength, pocketed millions. Proof that millionaires can always find ways to make money - and that consumers can’t do without milk, cars and steak pies.
thanks to
The Scotsman 
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