OPINION OF THE WEEK: We Need To Talk About Theft

Client Affairs

Tom Burroughes Group Editor 29 August 2023

The number of top-brand wristwatches stolen in cities such as London continues to rise, and that sheds light on the need for wealth advisors to explore personal security with their clients.

Many of our readers and their clients have hopefully been able to get away from work and hit the beach, holiday villa, yacht or wherever they spend down time. And, of course, the more affluent of them want to look good. For many men and women, that means having a luxury brand wristwatch.

Sadly, however, data shows that as the ranks of those able to afford these items have risen, so have robberies and losses. Figures from The Watch Register, a global crime prevention database, shows that 80,000 watches are registered as stolen or missing, with a total value of more than £1 billion ($1.26 billion).

The data also shows an upward trend. Last year, The Watch Register, which is based in the UK, saw 6,815 watches newly recorded as being missing or stolen, skyrocketing by 60 per cent in the number of missing or stolen watches added to its global database during 2021. The £1.0 billion-plus value figure includes several high-value luxury watches that individually retail between £50,000 to £100,000 or more, with brands such as Rolex, Omega and Patek Philippe.

Prices remain high even though there’s been a bit of slippage of late as economic conditions have tightened. According to the Bloomberg Subdial Watch Index, which tracks prices for the 50 most traded watches on the secondary market by value, sales declined by 1.1 per cent in a month in August. There have been big gyrations. As the news service noted, a few days ago, after a “surge during the pandemic, prices for the most hyped pre-owned models from Rolex, Patek and Audemars Piguet began dropping sharply in March 2022 due to higher interest rates, slowing economies and the crash in cryptocurrency values.”

There is a massive skew towards men’s watches: around 90 per cent of the database’s timepieces are men’s models. The register argues that “it is clear that thieves are increasingly sophisticated and knowledgeable about the watches that will re-sell for the highest values.” Rolex accounts for 44 per cent of all stolen or lost watches. This is followed by Omega (7 per cent), Breitling (6 per cent) and Tag Heuer (5 per cent).

This is a global problem. The Register has figures from more than 90 countries. And all this unhappy reading, while it is just about watches and not other items such as jewellery, cars, or clothes, shows that sometimes it is an unsafe world out there. And, sadly, well-heeled financial hubs such as London, New York or Paris, for example, aren’t as safe as they ought to be. In London, in April 2021, the boxer Amir Khan had a £70,000 watch stolen at gunpoint. And footballer Raheem Sterling was the victim of an armed robbery in which burglars stole £300,000 in jewellery and watches in December 2022.

There are regional variations to consider: The Register notes that being able to recover stolen watches is dependant on the serial number being recorded on a database.

In some countries, such as the US, serial numbers are less commonly recorded by insurers and police than in the UK, which limits recovery potential.

Okay, so what can the wealth industry do about this?

Leaving aside political controversies about the allegedly lax standards of policing and law enforcement in places such as London (likely to be a hot-button issue in the London mayoral elections next year), what such stories tell us is that HNW individuals need to be careful and, of course, take insurance into account. (The level of thefts is typically far lower, as far as one can tell, in places such as Singapore and Dubai, where punishment for criminals is far harsher than in Europe.) It may be that stories about rising crimes involving luxury items might be a factor encouraging some HNW families to leave for supposedly safer places. This can explain part of the enthusiasm for so-called "golden visas."

Within certain countries, crime is arguably driving internal migration – one reads stories about how high and rising crime rates in cities such as San Francisco and New York, to give an American example, encourages an exodus. It may also explain the current popularity of Dubai, to take another case in a different part of the world.

This point, about law and order, along with health and wellbeing, was made a few weeks ago when Julius Baer issued its annual study on luxury spending and lifestyle. “Against a backdrop of a cost-of-living crisis, soaring energy costs, rampant inflation, and war in Europe, this year’s Global Wealth & Lifestyle Report shows that the top priorities among affluent individuals and families across the globe are a contrast between financial stability and personal resilience,” it said. “Wealth is now as much about ensuring the health and security of your family, both physical and mental, as it is about maintaining your lifestyle." Indeed.

These stories also shed light on an important role that advisors should take, particularly with younger clients who might not be as streetwise as they should be. Advisors need to get this right, of course, and not patronise clients by telling them what might be obvious. But in dealing with the offspring of the rich, or people who have suddenly become very rich and like to show it off, a friendly hand on the shoulder of advice is important. That means advising clients on their personal security arrangements, both at home, at work, and on holiday. This is the “physical” side of protection of the client that runs alongside cybersecurity.

A good deal of managing all this comes down to developing “situational awareness” – as they put it in security-speak. A wealth advisor might be better placed to give constructive advice to a less experienced client than even a friend or relative, although, again, much depends on context and culture. In some parts of the world, being aware of the risks is much more normal than in others. Advisors need to be insightful in understanding these differences. They also need to advise clients, for example, about recruiting and retaining trustworthy aides and staff - these can be a source of vulnerability if the process isn't managed right.

There’s another aspect of all this to consider. Enjoying the finer things of life, if one has earned them through enterprise, risk-taking and a lot of hard work, ought to be celebrated, not seen as something to hide or apologise for. One fears, however, that in these difficult times, there is also an element of an anti-wealth mindset taking root, particularly in Western Europe, for example, where flaunting wealth is seen as vulgar (there are lots of hypocrisies in all this).

The German writer and entrepreneur Rainer Zitelmann, whose books I’ve reviewed, has unearthed often unflattering insights into the amount of envy there is towards wealth in much of the developed world. While theft is done for hard cash rather than for some warped idea of “social justice,” it is hard not to note that the authorities these days tend not to bend over backwards to bring culprits to justice. And sometimes there is a certain salaciousness in the coverage of rich people being robbed.

What this all means, I am afraid, is that HNW individuals’ advisors need to recognise that their clients can be vulnerable. Advisors need to counsel them on what best to do when clients want to wear the sort of watches sported by James Bond, F1 racing drivers or business tycoons. Unfortunately, it is one of the blights of our age.