While globally in 2015 High Net Worth Individual (HNWI) wealth saw only a modest growth of 4 percent, wealth in Asia-Pacific grew at an aggressive 10 percent propelling Asia-Pacific into the lead position as the region with the most HNWI wealth globally according to the 20th edition of the World Wealth Report (WWR), released by Capgemini. This is the first time that Asia-Pacific is ahead of North America for both HNWI wealth and population. In 2015, Asia-Pacific held US$17.4 trillion in wealth with a 5.1 million HNWI population in comparison to North America’s US$16.6 trillion in HNWI wealth and 4.8 million in population.
Global HNWI wealth reached US$58.7 trillion and the HNWI population grew at 4.9 percent to be 15.4 million in 2015. Since 1996, global HNWI wealth growth has expanded by four times equaling nearly US$59 trillion, and if current modest growth rates hold, wealth is projected to reach US$100 trillion in 2025. Despite these record wealth levels, the report also found that only one-third (32 percent) of global HNWI wealth is currently being managed by individual wealth managers, representing a challenge and an opportunity for firms to consolidate assets.
“It is remarkable that only one-third of HNWI wealth is currently with wealth management firms which shows how great the growth potential is for firms that can combine digital technology and FinTech capabilities with human expertise and relationships, to reflect state-of-the-art services for clients,” says Anirban Bose, Head of Banking and Capital Markets, Capgemini’s Financial Services Business Unit. “Those firms that can offer a digitally-integrated customer experience that builds on high levels of trust and confidence in firms and captures the characteristics of speed, flexibility and ease of use will be well positioned to become leading firms of the future.”
Asia-Pacific has been a driving force, doubling HNWI wealth and population over the decade. Asia-Pacific’s HNWI wealth grew by 10 percent in 2015 which is almost five times North America’s 2 percent wealth growth in 2015 decelerating substantially from 2014’s 9 percent growth rate. Using a more aggressive growth projection, if markets in Asia-Pacific continue to grow at its 2006 to 2015 rate, Asia-Pacific will represent two-fifths of the world’s HNWI wealth in ten years, more than that of Europe, Latin America, and Middle East and Africa combined. Japan and China stand out as regional dynamos, driving almost 60 percent of global HNWI population growth in 2015.
Opportunity for wealth management firms to attract more clients
Wealth management firms are well positioned to capture a greater share of the rising tide of HNWI wealth, the report found. HNWIs exhibited substantially more confidence in wealth management firms (+17 percentage points) and the financial markets (+30 points) in 2015 compared to 12 months prior. And while trust in individual wealth managers remained flat, 68 percent of HNWIs expressed satisfaction with the relationship, indicating a willingness to consolidate more of their assets with wealth managers.
Wealth management firms and wealth managers, however, have yet to gain a majority share of HNWI investable assets. In 2015, more HNWI wealth (35 percent) was essentially liquid, held in bank accounts or as physical cash, compared to the 32 percent that was overseen by individual wealth managers. Under-40 HNWIs were even less likely to turn to wealth managers (28 percent), while those in North America were more likely (39 percent).
This year’s report includes a retrospective of the last 20 years of HNWI wealth, which was marked by resiliency, even in the face of global financial disaster, as well as the rise of various trends, including social impact investing and technology disruption. Looking ahead, the report predicts that the pace of change will accelerate with disruption in four key areas: clients, operations, regulations, and digital technology. You can read it in the following link.