Following the publication of its recent World Wealth Report, Capgemini talks to this publication about some of the key findings, including how it appears that UHNW individuals now have more financial relationships with banks and other institutions than used to be the case.

When Capgemini issues its annual world wealth report, there is plenty of media focus on the eye-popping figures showing how much more wealth high net worth and ultra-HNW individuals have. 

And there's plenty of detail too on which regions are setting the hottest pace, allowing firms to reflect on how they can tap into that opportunity. A takeaway from the latest report, issued recently, is that North America is back in the driving seat. A useful point to remember amidst all the drama about Donald Trump, Joe Biden and the race for the White House this year. The new findings came in the World Wealth Report 2024: Intelligent Strategies For Winning With The Ultra-Wealthy.

What perhaps is even more important for the readers of this news service, however, is how the raw numbers translate into profitable opportunities. One finding from the report that strikes home is that UHNW individuals are increasing the number of their financial partnerships. They have moved from an average of about three relationships a few years ago to seven now.

“No one single firm is meeting all the expectations of this particular segment,” he said. “The expectations from the client point of view have risen, their portfolios are more complex, and they are evolving,” Gareth Wilson, head of UK banking and capital markets at Capgemini, told this news service. 

“We have also seen the growth of passion investments and that’s something we have seen in the past 12 months. They absolutely require a different type of wealth management support and advice. There is also a generational shift. About $80 trillion of wealth in transfer over the next 20 years,” he said. 

“This is all a challenge and opportunity for wealth management firms, such as [being able] to partner with family offices,” Wilson said. 

A reminder of the headline numbers: the global HNW individual wealth and population rose by 4.7 per cent and 5.1 per cent in 2023, respectively. North America clocked up the most robust recovery, expanding by 7.2 per cent in HNW wealth and 7.1 per cent in the number of such persons. For Asia-Pacific, which for recent years had closed the gap with North America, performance slacked off somewhat. HNW wealth rose 4.2 per cent in 2023, and the population rose by 4.8 per cent. Europe was more modest, rising by 3.9 per cent and 4.0 per cent, respectively. 

Besides Capgemini, organisations such as UBS and Boston Consulting Group (see here and here, respectively) have shed light on wealth growth trends, including the relative sizes of offshore/international centres such as Switzerland, Hong Kong, Singapore, Dubai and the Channel Islands. Such figures explain why wealth expertise is still a hot commodity, and not going away. In fact, geopolitics and tech change are only likely to keep such expertise in demand. 

Helping hands
The report contains more data to back up Wilson’s point about the growth in relationships that UHNW individuals want or need. The report said that 78 per cent of surveyed UHNW individuals consider value-added services essential to wealth management firm relationships. 

This news service asked Wilson about whether, as UHNW individuals use so many financial institutions, they should acquire a sort of “overseer” to keep a holistic view of all this complexity. 

Wilson was not certain an actual person is needed to do that job. 

“I am not sure if it must be a person; this could be a single digital aggregation of your wealth. Today, with data reporting, people want speed,” he said. 

In talking about the very language of “high net worth” and the like, this news service suggested to Wilson that the definitions must change to account for the inflation in the value of money. The old “HNW” amount of $1 million of investable wealth isn’t worth what it used to be.

Wilson said that those with $1 million to $5 million of investable wealth count as “millionaires next door,” from $5 million to $30 million, they are “mid-tier millionaires,” and above $30 million, they are ultra-HNW.

The faster pace of wealth growth by North America has various causes. The region is more friendly towards innovation, Wilson said. The rapid rise of US equities – led by the “Magnificent Seven” Big Techs, such as Amazon, Nvidia and Microsoft – is one of the reasons. All that said, “Asia, though, is still very relevant,” Wilson said.

Wilson referred, for example, to the growth of a large and affluent Indian middle class. Asia is well placed to capture economic benefits from AI and forms of digital technology.  

In Europe, while growth has been less robust than in North America – perhaps a reflecting Europe’s higher taxes and regulatory levels – markets in certain countries have posted strong gains. The CAC 40 index of French equities ended 2023 up by almost 17 per cent, driven by gains to its luxury goods sector, as seen by share price performance of Hermès and LVMH. The more domestically focused FTSE 250 only gained 4.5 per cent, buffeted by a lack of tech companies, sluggish economic growth and political uncertainties.

In Asia, a bum note was sounded last year by China, with the Shanghai Composite down 4 per cent, dragged by a weak economic recovery and troubles in the real estate sector. On the other hand, Japan had a banner year: the Nikkei-225 chalked up 28 per cent returns, benefiting from the country’s drive to unlock cash from corporates under new governance rules.