Report reveals North America leads decline in wealthiest population; and how wealth management firms can align with these clients' demands
Despite some big names increasing focus on the world’s wealthiest, wealth managers are not always aligned with their requirements according to a new report.
The global population of high-net-worth individuals (HNWI) fell 3.3% in 2022 while their wealth fell 3.6% to US$83 trillion amid the pressures of geopolitics and macroeconomics – the sharpest drop in a decade - and North America posted the largest drop.
Capgemini’s World Wealth Report published today (June 1), reveals that wealth in this region slumped 7.4%, way above the 3.2% seen in Europe and 2.7% in Asia Pacific.
In contrast, wealthy people’s fortunes improved in Africa, Latin America, and the Middle East, helped by strong performance in the oil and gas sectors.
Despite the global reduction in HNWIs there is still a significant opportunity for wealth managers to meet the needs of these big-ticket clients if they improve digital offerings to enhance client relationship tools.
Digital demand
The report found that, while technology can help advisors deliver timely financial advice and value-added expertise, only one in three executives ranked their firm’s end-to-end digital maturity as high.
Almost half of poll participants said the cost per relationship manager is rising, driven primarily by wealth value chain inefficiencies.
Not having digital tools and channels up to speed means advisors spend too much time on non-core activities, eating into time that could be spent on client relationships and pre-sales efforts.
More than half of HNWIs said that their choice of wealth management firm is influenced by value-added services, but only half said that their current firm had the capacity to deliver them and 3 in 10 are likely to switch firms in the next 12 months.
“Wealth management firms are at a critical inflection point as the macroenvironment is forcing a shift in mindset and business models to drive sustainable revenue growth,” said Nilesh Vaidya, Capgemini’s global head of banking and capital markets.
He added that agility and adaptability will be key for HNWIs in their focus towards wealth preservation.
“The industry will need to fortify value, empower relationship managers, and unlock new growth opportunities to remain relevant,” he said. “Their success will be tied towards solving issues relating to digital immaturity in the wealth value chain.”
Expanding the pool
The report also found that wealth managers may be leaving money on the table by not considering the significant opportunity in the HNWI population.
North America (46%) and Asia-Pacific (32%) hold the largest share of global affluents in wealth value and population size with almost $27 trillion in assets, but one third of wealth firms are not exploring this segment.
Seven in ten affluent respondents intend to tap their bank for wealth advice in the next year.
Capgemini says that wealth management firms can build a client base of HNWIs by:
- Leveraging the existing wealth management setup by accelerating end-to-end digital transformation
- Developing a wealth-as-a-service (WaaS) proposition using third-party channels, including retail banks and independent advisors
- Building a dedicated platform for wealth services augmented with self-service tools to improve customer management
ESG data
The wealth report touches on ESG investments which remain a priority for HNWIs, but the data available is still not providing the transparency and insights required to effectively meet this demand.
