Capgemini’s World Wealth Report has revealed that the global high net worth individual (HNWI) population has fallen by 3.3% to 21.7 million in 2022.
It also found that the value of HNWI wealth had decreased by 3.6% to $83trn (£67tn, €78trn). According to the report, this marks the steepest drop in 10 years, due to geopolitical and macroeconomic uncertainty.
The report found that the steepest wealth decline was in North America (-7.4%), followed by Europe (-3.2%) and Asia-Pacific (-2.7%). Africa, Latin America and the Middle East showed financial growth in 2022, due to strong performances in the oil and gas sectors.
While just under a quarter (23%) of HNWIs said they had generated more returns from ESG-related assets, 41% of respondents said ESG investment was a top priority. More than half (63%) of HNWIs reported that they had requested ESG scores for their assets.
However, the survey also showed that only 52% of wealth managers view data analysis as a top priority and just 31% see traceability as key.
Of the relationship managers surveyed, 40% said they need more data to understand ESG impact, and nearly one in two said they need more ESG information to engage effectively with clients.
Lack of digital tools
According to the report, the current lack of digital tools is limiting relationship managers from delivering timely financial advice and value-added expertise. It is also impacting their bottom line.
On average, only one in three executives ranked their firm’s end-to-end digital maturity as high. Nearly half (45%) said the cost per relationship manager is rising, driven primarily by wealth value-chain inefficiencies.
The report found that lagging digital readiness and poor omnichannel platforms are increasing time spent by relationship managers on non-core activities, leaving only a third of their time available for pre-sales work and client interaction.
More than half (56%) of HNWI respondents said that value-added services are influencing their selection of a wealth management firm, yet only one-in-two expressed satisfaction with their relationship manager’s capacity to deliver on these. Nearly 31% said they were likely to switch wealth-management providers 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. Agility and adaptability are going to be key for HNWIs as their attention moves towards wealth preservation. The industry will need to fortify value, empower relationship managers and unlock new growth opportunities to remain relevant,” said Nilesh Vaidya, global head of banking and capital markets at Capgemini.
“Their success will be tied to solving issues relating to digital immaturity in the wealth value chain.”
The ’affluent’ segment
The report also points to expanding the pool of potential wealth-management clients, to help drive long-term growth across the industry, says Cap Gemini. It highlights the ‘affluent’ segment (those with investable assets of between $250,000 and $1m).
It also found that North America (46%) and Asia-Pacific (32%) hold the largest share of global affluents in wealth value and population size. Despite holding nearly $27trn in assets, almost 32% of total HNWI wealth, 34% of firms are not exploring this segment.
Most (71%) of affluents are interested in seeking wealth-advisory services from their banks in the next 12 months.
According to the report, wealth-management firms can pursue three options to build an affluent customer base: accelerating end-to-end digital transformation; developing a wealth-as-a-service (WaaS) proposition using third-party channels, including retail banks and independent advisors; and by building a dedicated platform for wealth services, augmented with self-service tools to improve customer management.
