Aided by strong Asia-Pacific growth, global HNWI wealth is projected to surpass US$100 trillion by 2025 (although several trillion was wiped out Friday), nearly triple the 2006 amount, according to the "World Wealth Report 2016." In its 20th annual "World Wealth Report," Capgemini suggests that wealth management firms can enable digital access by putting wealth managers at the center of digital transformation and collaborating with FinTech players.
Asia-Pacific: region with the most HNWI wealth
The "World Wealth Report" highlights that in 2015, the Asia-Pacific region surpassed North America in HNWI wealth for the first time ever against a backdrop of more moderate wealth expansion throughout the rest of the world. Aided by the Asia-Pacific region, global HNWI population and wealth grew modestly in 2015, by 4.9% and 4.0%, respectively, while faltering growth in the Americas constrained global HNWI wealth expansion. However, last year's population and wealth growth in HNWI was well off the more robust 2010 to 2014 annualized rates of 7.7% and 7.2% respectively.
The authors of the "World Wealth Report" point out that as in previous years, Japan and China made up half of the group of four that dominate HNWI wealth. Of note, along with the United States and Germany, the four countries garnered 61.2% of global HNWIs in 2015:
The Capgemini report points out that traditionally, ultra-HNWIs -- those with $30 million or more in investible assets -- have acted as the engine behind overall HNWI population growth. However, this was not the case last year, primarily due to the powerful influence of the Latin American ultra-HNWI segment:
Underscoring the importance of the region in HNWI wealth expansion, the report states that over the next decade, the Asia-Pacific region is expected to change the face of global HNWI wealth. As set forth in the following graph, already in the past ten years, the Apac region has doubled its HNWI population, with China being fundamental to the increase, tripling its HNWI population and wealth during this time:
HNWIs hold less than one-third of their wealth with wealth managers
The "World Wealth Report" adds that wealth managers oversee less than one-third of global HNWI wealth, with a part of it locked up in various illiquid assets, including real estate and businesses. Elaborating on the sizable potential, the report points out that over one-third of the total remains essentially liquid and thus potentially available to wealth managers. As can be deduced from the following graph, a substantial portion of this wealth is lying in retail bank accounts, offering vast opportunity for wealth managers to attract sizable amounts from HNWI assets:
Emphasizing the critical role of digital capability, the Capgemini report points out that HNWIs are not fully satisfied with the digital tools their firms provide. The report notes that digital capability is crucial to maintaining and growing profits, though very few firms have built differentiated digital maturity into their businesses and are putting a portion of profits at risk.
The Capgemini report highlights that as HNWIs increasingly embrace new FinTech capabilities, digital maturity is only going to increase in importance. The report suggests that firms collaborate with FinTechs and wealth managers and states that they must take action to ensure they remain top of mind as HNWI wealth continues to expand.