What You Need to Know
- Inflation, falling stocks, war in Ukraine and coronavirus variants weigh on HNW investors whose numbers and wealth grew substantially last year.
- Firms must rethink their engagement strategies as the demographic of HNW individuals continues to evolve.
- By prioritizing automation and data-driven insights, wealth managers can provide personalized customer experiences to emerging client segments.
Capgemini’s latest World Wealth Report, published Tuesday, finds that many wealth management firms are failing to capture emerging high-potential market segments that require engaged inclusion and customized service.
The report comes at a time when stocks are falling and worries about inflation, fallout from the war in Ukraine and coronavirus variants weigh on high-net-worth investors whose numbers and wealth grew substantially last year.
A Look Back
In 2021, the world’s population of high-net-worth people grew by 7.8% and their wealth by 8%, according to the World Wealth Report.
Capgemini defines high net worth as $1 million or more in investable assets, excluding primary residence.
North America boasted the biggest increase in high-net-worth population and wealth, 13.2% and 13.8%. In the U.S., a robust tech sector sparked a 14% increase in HNW wealth.
The eurozone had the next-highest growth rates in 2021: 6.7% in high-net-worth population and 7.5% in wealth. The Asia-Pacific region, which had dominated growth over the past decade, dropped to third place, with HNW population growth of 4.2% and wealth 5.4%.
In 2021, the U.S., followed by Japan, Germany and China, retained its top position in population of HNW individuals. Together, these four countries account for 63.6% of the global population, up 0.7% from 2020.
Here are the rates of HNW global population and wealth growth by levels of investable assets:
- $30 million-plus: 9.6% wealth; 8.1% population.
- $5 million to $30 million: 8.4% wealth; 8.5% population.
- $1 million to $5 million: 7.8% wealth; 7.7% population.
The report noted that the growth gap across wealth bands is shrinking, indicating a more level playing field, a development it credited to improved information access for investors and democratization of asset classes.
Capgemini’s 2022 report covers 71 markets, accounting for more than 98% of global gross national income and 99% of world stock market capitalization. The firm’s Insights Survey queried 2,973 high-net-worth individuals across 24 major wealth markets in North America, Latin America, Europe and the Asia-Pacific region.
Interviews and surveys queried more than 70 wealth management executives across 10 markets on the new tech-wealth segment, market trends, the role of the CMO and future strategies. And Capgemini’s 2022 Wealth Manager Survey received some 350 responses across seven markets.
Emerging Client Segments
According to the report, the demographic of HNW individuals has continued to evolve, with increasingly more women, LGBTQ+ individuals, millennials and members of Generation Z now seeking wealth management services. To capture these emerging client segments, firms must rethink their engagement strategies, Capgemini said.
Each emerging client segment has its own values, preferences and requirements, which many wealth management firms are currently unequipped to provide for. As a result, many of these wealthy people look to more adaptive competitors or smaller family offices.
Consider these examples: