Capgemini: Technology Is a Threat to Wealth Managers

Private banks will be uneasy with the latest findings from a global wealth report.

The private bankers who are afraid that financial technology is encroaching into their safe space and might one day eat their lunch could be closer to seeing that vision come true. There is a growing acceptance from the ultra high net worth population (UHNW) that wealth management services offered by technology giants such as Apple, Facebook, Google or Amazon would be worth consideration.

Capgemini's 2017 World WealthReport found that 56.2 percent of the ultra-wealthy polled would consider such services from tech giants. Not unexpectedly this figure balloons out to 81.7 percent among a younger wealthy demographic. In Asia Pacific, excluding Japan, UHNWs were also amenable to using wealth management services by such firms.

Little Progress Noted

The report finds that while executives at wealth management firms express a high level of awareness of hybrid advice models, they have not made progress in delivering satisfactory solutions to clients. Capgemini's research indicates that proficiency in delivering hybrid advice would be well worth the effort, as 71 percent of HNWIs globally identify hybrid advice as significant in their decision to consolidate assets with their primary wealth manager.

At the same time, firms have not been effective at implementing hybrid advisory services, with analysts giving only an average score of 2.74 out of a possible 7 to firms on this aspect. «With global wealth at record highs, the 2017 World Wealth Report findings are especially critical for wealth managers moving towards delivery of hybrid advice,» said Anirban Bose, head of global banking and capital markets at Capgemini.

Wealth Grows Around the Globe

The big three markets of Asia-Pacific, North America, and Europe contributed equally to the increase in HNWI growth, pushing the HNWI population and wealth up by 7.5 percent and 8.2 percent in 2016, Capgemini says. While Asia-Pacific remains the world’s largest-HNWI market, its growth slowed slightly. A handful of markets, including Russia, Brazil, and Canada dramatically reversed course from declines suffered a year ago.

The market rankings for HNWI population shifted considerably, with France surpassing the U.K. to take the number-five spot and Sweden moving up two places to penetrate the top 25 for the first time.