SINGAPORE (July 10): Overall global high net worth individual (HNWI) wealth dropped by 3% or US$2 trillion ($2.7 trillion) in 2018 after seven consecutive years of growth, according to the World Wealth Report (WWR) published on July 9 by Capgemini.
The decline in wealth was mainly due to a US$1 trillion drop in wealth in the Asia Pacific region as its HNWI population and wealth dropped by 2% and 5% respectively.
China took the biggest hit and was responsible for 53% of wealth loss in Asia Pacific and more than 25% globally.
With this, the global population of HNWI also declined by 0.3%.
Things were also rather gloomy in all the other regions with Latin America seeing a 4% drop in HNWI wealth, Europe by 3% and North America by 1%.
However, the Middle East bucked the trend and experienced a growth in HNWI wealth and population of 4% and 6% respectively, due to strong GDP growth and financial market performance.
Although China saw a large drop in its HNWI wealth, it still remained one of the countries with the largest HNWI populations, along with the United States, Japan and Germany.
The ultra-HNWI also saw a population and wealth decline of 4% and 6% respectively, accounting for 75% of the total global wealth decrease.
Despite the declines, the report found that HNWI’s trust and satisfaction in wealth management firms increased by 3 percentage points (pp) y-o-y.
But the report also revealed that the biggest reason for HNWIs to switch firms in 2018 was due to unsatisfactory service experience.
With up to 50% of HNWI clients unsatisfied with current mobile and online platforms, and 85% demanding more digital interaction when accessing portfolio information, investment in next-gen technologies will be critical for wealth management firms to enhance the client experience, says Capgemini.
And while there is consensus among firm executives and wealth managers that Artficial Intelligence is a key game-changer, only 5% of surveyed firms said they had implemented AI strategies across all core areas.
Anirban Bose, CEO of Capgemini’s financial services and member of the group executive board, says, “While the volatile economic environment of 2018 led to HNWI wealth decline globally, wealth managers have been extremely successful in maintaining strong levels of client trust.”
“However, future success will depend on the agility of wealth management firms to evolve the client experience and find new ways to add value through more personalized services. Next-gen technology and closing expectation gaps will aid this, but the landscape is shifting so quickly that companies must not be afraid to overhaul their strategy and business models if needed,” adds Bose.
