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Signs Of a Czech Financial Revolution?

I like Prague, it’s full of surprises. It’s a city of contrasts.  And this is also reflected in the clients we meet as financial advisers.

The Brits who move here do so for reasons you won’t find in any of our other 73 offices around the globe.

We meet Prague residents regularly and the difference in attitude to money between the generations is stark, and again, very different from British attitudes to money.


Foto: fotolia

Let me deal with the Brits first. Our core business is advising high net worth individuals, who have either moved abroad for the tax advantages that their new country of residence extends them or because they have made their money and have moved to an exotic location to enjoy the fruits of their labour. Not so in Prague.

Whilst much of what I say is painted with a broad brush-stroke, anyone who has lived here for a while will observe it. The British who move to Prague, come here for the lifestyle. They (for the most part,) aren’t wealthy but come here because the wage they can attract goes further because the cost of living is about 30% less than that in the UK.

There are also two large sectors of employment occupied by Brits, and they are Education and Recruitment. The first, traditionally public funded and starved of funds, and the latter a service industry with pressure to keep costs down. Both, not known for excessive wages.

For that reason, the expat Brit community is not our largest market. Our market is the local Prague population.

The usual finance model we’re familiar with in the UK is noticeable by its absence here. The high personal borrowing, low savings (for short-term emergencies or long-term retirement planning), typical among UK families, is quite the opposite amongst the people in Prague. The Czechs abhor borrowing (it’s expensive here for one thing,) and love saving. If they get a mortgage, they have a short 5-15-year term, instead of the standard 25 years in the UK. They also prioritise the early repayment of the loan too. In my experience, everyone has an element of savings.

Here too though, there is a contrast, between the older and younger generations of Prague people. The split (from my maths,) has to do with the velvet revolution in 1989 when the Czech Republic gained freedom from the one-party Communist state.

Anyone born around that time will not remember the years of austerity before then.

The younger generation see all the West can produce and wants the same for themselves – and why not? That’s what freedom is all about.

The older generation is content with their lot and is resigned (happy?) to a life after work of ‘just getting by’. It’s what they’re used to. It is normal.

The younger, wealthier generation, who have become our clients in Prague, are attorneys, CEOs, and directors of growing Czech businesses, businesses that used to be owned and run by westerners coming into the market to replace the vacuum left by the Communists.

This younger generation is leading Prague and the Czech Republic into the 21st Century. It is a new, confident Czech Republic that is taking its place on the European stage.

We, the remaining western companies, need to acknowledge that. Need to move and work with this generation, using new technologies, new products, and social media to get our message across, or this invigorated Prague generation will leave us behind.


Author: Perry Wilson (perry.wilson(at)devere-prague.cz), a Wealth Manager with The deVere Group in Prague

Pragueconnect.cz, Prague 20.03.2018


 
 
 
 

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