HNWs abandon caution post crisis as their numbers boom - Spear's Magazine

HNWs abandon caution post crisis as their numbers boom

Ultra high net worth investors are putting the financial crisis behind them as they increasingly shift their focus to growing their wealth rather than simply preserving it. At the same time, their numbers are rising dramatically too: 128,000 people worldwide are now worth more than $30 million, up nearly 20,000 on last year.

According to the World Wealth Report 2014 by Capgemini and RBC Wealth Management, 31 per cent of the world’s wealthy (with at least $20 million in investable assets) wanted to grow their wealth in 2014, compared with 18 per cent last year. This reflects much greater confidence in global economic prospects. Similarly, 27 per cent were focusing on preserving their assets, a sharp decline from 45 per cent in 2013.

The picture was different in the UK, where HNWs preferred wealth preservation strategies (30 per cent) to wealth growth strategies (18 per cent). This could perhaps be explained by the fact that several changes taking place in Britain – including changes to non-dom tax rules, proposed EU changes to trusts and the general election next year – are making HNWs more cautious. However, 83.6 per cent said they were confident in their ability to generate wealth in the near future.

The research also found that the number of HNWs worldwide reached a new high at 13.7 million in 2013, up 15 per cent from 2012. This was largely thanks to better economic circumstances and stronger performance in the equity market. Total HNW wealth rose by 14 per cent to $52.6 trillion in 2013.

Asia-Pacific saw the biggest growth rate in HNW population, increasing by 17 per cent. It was followed by the Middle East (16 per cent), North America (16 per cent) and Europe (13 per cent).

Latin America and Africa represented exceptions with the number of millionaires growing by only 3.5 and 3.7 per cent respectively.
Despite Asia-Pacific’s faster growth, North America managed to maintain its lead as the world’s biggest HNW market by population, with 4.33 million HNWs, 10,000 more than Asia-Pacific. But this could be the last year it enjoys such position, as the research expects Asia-Pacific to have the world’s largest HNW population by 2014.

According to the study, HNWs also have confidence in the wealth management industry, with three-quarters saying they have a high level of trust in their wealth managers and wealth management firms. Interestingly, they have less confidence in industry regulators.

Technology should be the focus of wealth managers, the report said. Although 30 per cent of HNWs worldwide still prefer to have a direct relationship with their private banker or asset manager, the study found that two-thirds expect most or all of their wealth management relationship to be run digitally in the next five years.