While 2019 was a boom for HNWIs, population and wealth growth in APAC was lower than the global average, and Covid-19 has brought more clouds on the horizon, according to consulting firm Capgemini.
Despite a global economic slowdown, economic trade wars and geopolitical tensions, the population and wealth of high net worth individuals (HNWIs) in APAC expanded by 8 percent in 2019 on the back of strong market performance from several Asian countries including Hong Kong, China and Taiwan. However, this was lower than the global average of 9 percent.
North America and Europe took the lead with around 11 percent and 9 percent growth respectively, surpassing Asia-Pacific for the first time since 2012, according to the «World Wealth Report 2020,» published today by Capgemini.
The report covers 71 countries, accounting for more than 98 percent of global gross national income and 99 percent of world stock market capitalization. Capgenimi surveyed more than 2,500 HNWIs across 21 major wealth markets in North America, Latin America, Europe, and the Asia-Pacific region. As it was conducted in January and February 2020, the survey results do not account for the impact of the Covid-19 crisis.
Shifting Preferences
Capgenimi noted that following the previous year's boom, investment priorities have now shifted with the onset of Covid-19, and sustainable investments that uphold environmental and social priorities are gaining significant prominence, with 27 percent of HNWIs expressing interest in sustainable investment products, and 40 percent of ultra-HNWIs willing to invest in sustainability.
«In the face of today’s extraordinary uncertainty, wealth managers and firms are finding themselves in uncharted waters,» Anirban Bose, Capgemini’s financial services CEO said. «This unpredictable period may also present opportunities for firms to reassess and reinvent their business and operating models to be more agile and resilient,» he added.
Capgemini projected a decline of between 6 percent and 8 percent in global wealth until the end of April 2020, compared with December 2019.
Evolving Expectations
Capgemini said increased unpredictability in the coming year will drive asset adjustments as well as higher client expectations and scrutiny over advisor fees, noting that hyper-personalization is needed to meet the evolving expectations of HNWIs.
One-third of respondents were uncomfortable with rates, and more than one in five HNWIs were considering switching firms in the next year, with high fees being the top reason for 42 percent of them. HNWIs are also citing a preference for performance and service-based fees over asset-based ones, indicating higher expectations on value delivered for fees charged.
