A report by Boston Consulting Group finds private wealth growth is on the decline, with only a 5.2% increase since 2014. Titled Global Wealth 2016: Navigating the New Client Landscape
, the report states, “Global private wealth grew sluggishly in 2015, with some markets seeing significant slowdowns, leaving wealth managers searching for innovative ways to meet the shifting needs of diverse client segments.”
All regions with the exception of Japan suffered a slowdown as the majority of new wealth was obtained through new wealth creation, such as rising household income, while existing assets such as equities and bonds remained stagnant or dropped in value.
Jocko Toic, financial consultant, owner and CEO of Toic Wealth Management, says low interest rates have decimated all hope of significant returns.
“There are no good investments out there,” he says. “You could meet with your financial people and sign up and a year later, you haven’t made anything. So it doesn’t matter what group you’re in, there’s not much to invest in today, that’s the big problem.”
“Because of low interest rates, all your safe investments are producing virtually nothing. So that’s driving investors into the stock market and that’s highly elevated those assets - today they’re very expensive, the S&P and so on.”
He adds that central bank efforts to pump quantitative easing into the market since the financial crisis have turned investors towards alternative asset building or relying on inflating housing values.
“People, because of low interest rates and because of stock market returns, they’re looking for alternative investments – real estate based, private markets, cash flow, REITS, there’s a real search for yield. People need cash flow,” he says.
According to the report, assuming equity markets recover, private wealth is expected to rise at a compounded annual growth of 6% over the next five years, reaching $224 trillion in 2020.
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