Wealth soared during the pandemic, snapping a 5-year trend of Asia Pacific leading the population of the world's wealthiest
The past 18 months has certainly been one of surprises; when the circumstances are unusual, often the outcomes are too.
While initial reaction to the pandemic from global equity markets sparked fear among investors, what has followed has seen wealth grow for many, including the world’s wealthiest.
The population of high-net-worth individuals (HNWIs) increased by 6.3% in the last year to more than 20 million while their combined wealth soared 7.6% as equity markets performed well and government stimulus supported economies.
Figures from the newly published Capgemini World Wealth Report show that 2020 snapped a 5-year trend of outsized gains for Asia Pacific’s wealthy community, with North America topping the league for both population and wealth of HNWIs.
Globally, those deemed ultra-HNWIs (US$30m+) increased both their population (9.6%) and wealth (9.1%) by more than less wealthy millionaires.
The report reveals the interest of wealthy investors to hold alternative assets among a diversified portfolio. Around 4 in 10 HNWIs are likely to request ESG scores for products offered by their advisors.
More than 7 in10 have invested in cryptocurrencies, with a similar share holding other digital investments such as domain names or apps. Non-fungible tokens (NFTs) and SPACs are also gaining the interest of wealthy investors.
Tech is key for advisors
The report confirms the important role that technology already plays – and will continue to do so – in the wealth management industry.
With pure technology players trying to eat away at traditional financial services stronghold, a hybrid model of digital and direct interaction is seen as the way to win.
Technological breakthroughs, changing social dynamics, new ecosystem players, democratization of investment management and the rise of digital channels and assets, will all impact the success or failure of wealth management firms in the future, the report says.
Many of the wealthiest clients are interested in hybrid models and more than one third are using technology for their asset management already.
“The wealth management industry must push its frontiers to capture customer mindshare and best serve HNW clients accustomed to BigTech convenience and personalization,” said Anirban Bose, CEO of Capgemini’s Financial Services Strategic Business Unit. “Investing in technology and talent is a critical need for wealth management firms to maintain their market share as WealthTechs continue to grow and BigTech entry into the space looms.”
Hiring and re-skilling
For wealth management firms, there is opportunity, but it requires a mix of digital and relationship skills.
Through re-skilling and hiring, firms that do well will be those that empower their advisors to work with an evolving client base that includes millennial and Gen Z HNWIs, women, non-traditional families, and more.
Firms will also need to deliver value alongside ESG options.
Stock market gains amid a volatile global economy drove increases in global High-Net-Worth individual (HNWI) population & global HNWI wealth in 2020. Which region came out on top? Find out in a special 25th anniversary edition of the #WWR21: https://t.co/ItSPm0wZrA pic.twitter.com/zSGJN9II9O
— Capgemini (@Capgemini) June 29, 2021
