Many superyacht owners run multinational companies with millions of pounds worth of turnover - but they often fail to consider the foreign exchange fees involved with their personal assets, which could potentially be costing them hundreds of thousands of pounds.
It was this gap in the market that inspired Ian Flanagan to create Voly, a financial management platform specifically tailored for high-net-worth individuals with multiple assets such as superyachts, private jets and properties across the globe. “Knowing how detailed UHNWI are with their companies and investments it's surprising that not the same focus is put on their personal lifestyle assets,” says Flanagan.
To help demonstrate the potential savings that the Voly platform could offer, the firm has created the following case study based on the real-life demands of a customer:
Asset one: the superyacht
Mr V owns a 70-metre motor yacht, which has an annual operation cost (including crew payroll) of €13.3 million. The yacht is chartered in the Mediterranean for €650,000 per week and is booked for eight weeks, resulting in an income of €5.2 million. Last winter season the yacht also underwent a €12.3 million refit, which was paid in eight instalments to the refit yard.
Asset two: the private jet
To help keep up with his international lifestyle Mr V owns a Gulfstream G650. This costs him $5.725 million per year, of which 37.5% is out of currency (for a total of $2.146.875).
Asset three: the Mediterranean holiday home
Like many BOAT International readers, Mr V has fallen for the charms of Sardinia and has a villa set on the coastline near Porto Cervo. The villa costs him €2.4 million per year, which he funds with €200K worth of currency bought monthly.
Asset four: his daughter’s accommodation
Mr V’s daughter is currently based in Singapore, and he pays for her accommodation at a cost of S$252,000 per year.
Asset five: the London pad
Mr V frequently finds himself in London for business and therefore has decided to make sure he has a permanent base in the capital. This costs him £3.156 million per year, which he funds in sterling currency that he buys monthly.
Asset six: the main New York home
The City that Never Sleeps is where Mr V officially calls home. His Manhattan apartment costs him $3.65 million per year.
Asset seven: the American holiday home
To escape New York’s cold winters, Mr V also has a holiday home in Palm Beach. This costs him $3.527 million per year.
In total Mr V has $12,877,000, €33,200,000 and S$252,000 worth of exposure annually. Taking all these values into account, with the live exchange rates, Voly estimates that the client would have been able to save a total of $417,603 if he had been using Voly’s Financial Management Platform.
Beyond the financial saving, huge amounts of time for the client’s personnel could also have been cut by using Voly. Mr V's assets would have resulted in 4,903 invoices, which could have been auto reconciled within Voly at a saving of five minutes per invoice. This, therefore, means that a total of 24,515 minutes, or 51 working days, could have been saved by using Voly’s Financial Management Platform. This time saving demonstrates the impact that Voly can also have on streamlining the financial process of a UHNWI family office and operations.
As the above case study proves, the amount of money that can be lost by not considering foreign exchange fees can quickly add up to a significant sum. To help deal with these high levels of exposure Voly has recently launched a specific treasury management team, which alongside the Voly platform, provides a full end-to-end solution.
“It always astonishes me the amount of money UHNWI lose on FX Fees,” says Flanagan. “Quite often when UHNWI make lifestyle choices, such as buying assets all around the globe, they forget to manage the currency exposure as they enjoy the fruits of their labour. This means FX and buying currency at competitive rates is often not a priority, resulting in them incurring hundreds of thousands in FX fees every year.”
The number of high net-worth individuals with multiple foreign assets only looks set to increase, with Savills reporting a "buoyant period" for the second home market post-pandemic. "We are hearing this from our associates across the world, and we work in most of the prime areas around the Mediterranean sunbelt and in the Caribbean," says Jelena Cvjetkovic, director in Savills Global Residential. "There are multiple motivations for purchases but in a lot of cases it is a desire for change, coupled with the ability to spend longer periods of time in their second homes, and for some of them it is diversifying their portfolio."
Cvjetkovic says that the major costs associated with second home ownership tend to be staff, management fees and local taxes. "People at this level analyse everything and they are very much aware of what the costs of running a property are," she says. "The costs can be multifaceted depending on what you are doing with the property. For example, there are some owners that want to be able to fly in on a whim are therefore they will keep a team of staff at the property at all times."
Flanagan believes that stretched family offices are often the reason why greater consideration isn’t given to FX transfer fees. “Family Offices are usually responsible for managing the assets of UHNWI and we find that most of the time they’re so busy managing the day to needs of their clients, they often find it far easier to contact their own bank or wealth manager to exchange currency, rather than use a specialist treasury management team to tailor an FX strategy specific to their requirements resulting in the best rates for their clients and in turn huge savings,” explains Flanagan.
Voly’s financial management platform, mobile app and pre-paid cards are tailored for the yachting industry and can manage charters expenditure and multiple assets such as private jets and new builds, with an integrated FX and payment platform. All these unique features together save captains and crew 75% of financial admin time. Our aim is to save our clients, time and money while improving efficiency and creating visibility. To find out more, visit volygroup.com.