Economy

Global High Net Worth Individuals Are on the Way to $100 Trillion in Assets

Jon C. Ogg

Published: September 28, 2017 10:55 am

Last Updated: January 12, 2020 7:42 am

The rich may get richer, but these days it seems that every group of people is doing better since the recession. 24/7 Wall St. has tracked several reports on growth, and one report showed that every ethnicity has seen improvement. Now another report is showing by how much the richest people in the word are doing better.

Capgemini has released its World Wealth Report 2017, showing that high net worth individuals in 71 countries did better in 2016 — and these people account for more than 98% of global gross national income and 99% of world stock market capitalization. Individuals with investable assets of $1 million or more saw their asset based rise 8.2% to $63.5 trillion in 2016. The 2015 growth was just 4.0%.

For a comparison outside of this report to see just how big these numbers are, the World Bank represents U.S. gross domestic product (GDP) of about $18.6 trillion in 2016, followed by $11.2 trillion in China and 44.9 trillion in Japan. The World Bank’s projected 2016 global GDP was put at $75.6 trillion.

While this was new wealth creation, the high net worth individuals did benefit from robust returns with a global average of 24.3% on investment portfolios overseen by their wealth managers. The number of high net worth individuals also rose by 7.5% around the planet to 16.5 million people.

One crucial consideration here is that high net worth individuals could cross an astounding $100 trillion in investable assets by 2025 if the 20-year average holds up at 5.9%.

Capgemini’s survey was based on more than 2,500 high net worth individuals. This covered 19 major markets around the globe and also took into account surveys from 40 to 50 wealth management executives.

The growth of about 8% was more or less equal among Asia-Pacific, Europe and North America. For the year 2016, Capgemini counted a population of 5.5 million in high net worth individuals in the Asia-Pacific region, followed by a high net worth population of 5.2 million in North America and 4.5 million in Europe.

One key change is being seen among the high net worth clients. They are wanting more hybrid advisory strategies and many are seeking to lower their wealth management fees.

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As far as the hybrid strategies, Capgemini’s report said:

Hybrid advice solutions are making a big impression on HNWIs, becoming just as valued as wealth manager-led offerings, and more so in some areas. HNWIs tend to reduce their sole reliance on wealth managers and adopt more of a hybrid approach as the wealth management relationship progresses. In the early stages of the relationship, wealth managers remain at the center of the relationship. HNWIs in Asia-Pacific (excl. Japan) and Europe were the most inclined to embrace hybrid advice, while those in North America were the least. The youngest HNWIs and the wealthiest HNWIs also showed a preference for hybrid services. Firm executives for their part expressed high levels of enthusiasm for hybrid advice models.

The report also addressed fees and satisfaction:

HNWI satisfaction could be improved, perhaps by offering a broader array of non-investment service options and revamping fee structures. Less than 60% of HNWIs globally are satisfied with their wealth managers or firms. One reason may be shortcomings in the full range of non-investment services being offered. In addition, less than half (48.7%) say they are fully comfortable with the fees they pay.