High Net Worth Individuals Lost $2 Trillion Of Wealth; Chinese Lead In Wealth Destruction (Here’s The Reason Why!)

Capgemini has just released its World Wealth Report 2019. It is found that after seven years of continuous growth, the overall High Net Worth Individual wealth reduces by 3% in 2018, with HNWIs viciously affected in the Asia-Pacific regions, mainly in China.

This reduction of 3% has resulted in a loss of 2 trillion USD worldwide. The point to be noted here, though is that inspite of all the loss and reduction, HNWIs still have maintained their trusts on wealth firms and managers and this number is notably high and progressing.

Key Highlights:

  •  3% global decrease in HNWI wealth, due to slowing economies in the Asia-Pacific regions and sluggish equity markets. China alone resulted in 25% of global decline.
  • Ultra-HNWIs are affected the worst. 75% of the total HNWI population affected badly fall under this category.
  • Surprisingly, inspite of all the loss, trusts of wealth management firms are strong, which means that they’ll have to work harder and find out changes in their techniques to meet up the expectations.

Even with 3% Global Decline, Middle East Wealth Grows

The global HNWI population reduced by 0.3% and wealth by 3%, mainly due to bad numbers in the Asia-Pacific region, with US$1 trillion global decline in wealth. China contributed 25% decline, Latin America declined by 4%, Europe by 3% and North America by 1%. Inspite of all these fall-outs, Middle East showed a spectacular rise, by producing 4% growth in HNWI wealth and increasing its HNWI population by 6%, due to strong GDP growth and financial market performance.

Cash Preferred over Equities

Cash replaced equities as the most preferred asset class in Q1 2019, making it 28% of the HNWI financial wealth, while equities went down to 26%. Volatile equity market conditions slightly improved the game and climbed up somewhere upto 13%, 4% points better as compared to the previos years.

Wealth Management Firms Will have to Buckle Up

Even though the wealth declined by 3% causing a loss of $2 trillion USD, HNWI’s year-over-year trust and satisfaction in wealth management firms increased by 3 percentage points over already high levels. This creates a major opportunities for such firms and managers to stand up to increasing HNWI expectations as an unsatisfactory service experience was the biggest reason for HNWIs to switch firms in 2018.

BigTechs are known to be among one of the best in these fields. About 50% of HNWIs are satisfied with their current mobile and online platforms, and 85% demanded more digital interaction when accessing portfolio information. It is believed that next-generation technologies, including AI in all core areas of wealth management, shall level up the already high bars of wealth management firms, to better deliver to the expectations of HNWIs.

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