[PB Travelogue] "Rapidly Rising Startup Young Rich... Characterized by Bold Investments"

Editor's NoteIn the past, the image that came to mind when thinking of a 'rich person' was that of an elderly corporate CEO. However, recently, emerging wealthy individuals such as the second-generation 'young rich' children of these CEOs, startup founders, tech company employees, and influencers have rapidly risen. Typically, the financial sector classifies individuals with financial assets exceeding 1 billion KRW as 'rich.' According to Hana Financial Management Research Institute, the average total assets per person among domestic young rich aged 20 to 40 reach 6.6 billion KRW. Of these assets, about 60% are real estate and 40% are financial assets. Asia Economy spoke with private bankers (PBs) from the four major banks?KB Kookmin, Shinhan, Hana, and Woori?to hear their stories about these individuals.

At Hana Bank's Apgujeong PB Center located in Gangnam Apgujeong, where many young rich reside, about 25% of clients are young rich, including the second generation of traditional wealthy families. In recent years, the number of startup founders has increased, and although still a small proportion, the client base has diversified compared to the past to include influencers such as YouTubers.

"Pursuit of Rationality... Active and Bold Investment"

Lee Kyung-gu, branch manager of Hana Bank Apgujeong PB Center, explained that compared to traditional wealthy individuals, recent young rich show very bold and proactive behavior when investing. He said, "Young rich are much more rational than their parents' generation," adding, "They need to understand things themselves, and once they do, their investment actions are very quick." Park Young-ran, head of Hana Bank Apgujeong PB Center, also added, "Young rich are often prepared to bear risks." He continued, "Traditional wealthy people tend to build relationships first and then open up about themselves, whereas young rich are more expressive from the start, asking 'Can you accommodate this?' and if they judge it’s not suitable, they boldly 'cut' immediately."

While the second generation who inherited wealth from their parents used to dominate, recently, clients who have succeeded without parental backgrounds are becoming more noticeable. Successful young rich in business handle much larger sums. Startup founders have had cases where 100 billion KRW was deposited into their accounts through fundraising. The branch manager said, "Even with long banking experience, seeing figures in the 100 billion KRW range is rare, but since a few years ago when investment was active, the frequency has increased." They actively engage in investments unfamiliar to traditional wealthy individuals, such as unlisted companies and angel investments (a form of investment where funds are provided to startups in exchange for shares). Park said, "Emerging wealthy individuals who built their wealth through entrepreneurship make bold decisions about industries they believe are worth investing in," adding, "Investment destinations diversify according to market volatility, and they actively utilize market fluctuations."

Young rich sometimes make surprisingly bold choices, such as choosing immigration for tax savings and rationality. The branch manager said, "I have seen cases where immigration was chosen for assets, inheritance, or business items," adding, "Old rich find it difficult to execute such actions, but young rich are very proactive."

"Information Sharing in Communities... Preference for Buildings in Real Estate"

In the past, professionals like doctors had communities for exchanging information, but nowadays, information exchange is active within communities of emerging wealthy individuals such as tech company employees and startup founders. They are often connected through academic or business networks. When blockchain was unfamiliar, a startup client once explained the related concepts to a PB. The branch manager said, "In the case of unlisted investments, sometimes there is more high-level information within their own league," describing the atmosphere.

As a result, PBs have increasingly prepared richer and more thorough background data to deal with young rich clients. Park added, "Even second-generation young rich, who in the past followed their parents and did not directly participate in asset growth, now tend to actively use their own information to increase assets."

Young rich do not differ much from traditional wealthy individuals in real estate investment. They generally try to allocate about 50-60% of their total assets to income-generating real estate. However, they prefer buildings over houses or land. While they seek much advice regarding residential homes, they rarely consider houses as investment tools. Young rich tend to prefer residential areas such as Gangnam-gu Apgujeong and, recently, Hannam-dong in Yongsan-gu, where luxury homes are concentrated.

Lee Kyung-gu, Branch Manager of Hana Bank Apgujeong PB Center (left), and Park Young-ran, Deputy General Manager of Hana Bank Apgujeong PB Center

"Liquidity and Persistent Information Gathering"

Another common characteristic of young rich mentioned by PBs is their curiosity about various fields beyond their profession or major, and their persistent tendency to master any area. Park said, "Young rich have a strong interest in many areas beyond their profession or major and try to gather diverse information."

PBs emphasized 'liquidity' as advice for investment. Park said, "Young rich prefer products that are easy to liquidate when investment opportunities arise rather than having funds tied up." He continued, "For general investors to have opportunities, liquidity is necessary," advising, "It’s not about going all-in with all funds but gaining experience by actively investing within manageable limits."