The number of rich people in Spain grows year after year: 2021 is over with 246,500 holders of great fortunes, 4.4% more than the previous year. And it ranks 15th among the top 25 markets by population HNWI (ultra-high net worth individuals) –North America occupies the first position with 746,000 people and Belgium last with 141,000 people, respectively– in the World Wealth Report 2022 study, prepared by the Capgemini Research Institute, which analyzes the evolution of the great fortunes and the wealth accumulated in 2021 worldwide, by region and country, and in which they consulted 973 of the great fortunes in the 24 main wealth markets, in addition to conducting interviews and surveys with more than 70 wealth management executives in 10 markets.
As for the wealth of the world population, it increased by 8% in 2021 and Spain continued its growth path, reaching 719.7 billion, 5.3% more than the previous year.
Furthermore, the research reveals that Europe is outperforming Asia-Pacific in growth rate, driven by the recovery of the European economy and the slowdown in growth in this region: 70% of high net worth individuals globally have invested in digital assets and currencies.
The study reveals that the number of high net worth individuals grew by 7.8% and their wealth increased by 8% in 2021 due to the stock market-driven recovery of the economy. North America continued its growth trajectory, showing the highest increase in population and wealth in the richest, 13.2% and 13.8%, respectively. From a global growth rate standpoint, the unpromising growth of HNWIs in 2021 in terms of population (4.2%) and wealth (5.4%) put the region, which had dominated the growth of the wealthiest in the last decade, in third place.
In 2021, the top four positions in millionaire population by market were led by the United States, Japan, Germany, and China, respectively, which comprise 63.6% of the world’s high-net-worth population. This was an increase of 0.7% from 2020.
The ultra-millionaire segment (people with a net worth of $30 million or more) led the global growth of super-rich wealth and population, with rates of 9.6% and 8.1%, respectively. . While the population (7.7%) and wealth (7.8%) of the next millionaires (people with a net worth between 1 and 5 million dollars) grew more slowly, leading to an increase in growth rates of population and wealth.
By contrast, the population and wealth of mid-tier millionaires (people with a net worth between $5 million and $30 million) increased to 8.5% and 8.4%. The report also indicates that it is bridging the gap between wealth bands, showing a more level playing field, due to improved access to information for investors and the democratization of asset classes.
On the other hand, the demographics of this group have continued to evolve, with more and more women, LGBTQ+ people, millennials and members of Generation Z, who are now seeking wealth management services. Each of these emerging customer segments has its own values, preferences and requirements that many wealth management firms are not equipped to manage, leading many of these wealthy to turn to more tailored competitors or smaller family offices.
For example, women of all wealth levels will inherit 70% of the world’s wealth in the next two generations. They look for companies that not only offer transparency in charges and data security, but also information on how to grow their wealth.
Also, says the aforementioned study, 39% of millennials rich has switched providers in the last year due to lack of transparency. They are frequently looking for new wealth managers as they demand more interaction based on digitization, education and convenience.
On the other hand, the rise of technology and the rise of unicorns (private start-ups worth more than $1 billion), backed by venture capital firms, has created a unique group of tech-wealthy affluents; and this significant high-net-worth segment offers enormous potential for wealth management firms, yet only 27% say they actively pursue these prospects.
The new wave of these types of profiles has unique client needs that force wealth managers to adjust their business strategies. To capitalize on this largely untapped customer segment, wealth management firms must focus on offering greater convenience and personalized experiences, and achieving build trust through approaches such as ecosystem collaboration, end-to-end digital solutions, and greater diversity when recruiting new talent. In addition, wealth management firms must adopt data-driven advisory capabilities
The wealth management industry is experiencing a diversification of investment options, from Sustainable Investing (SI) to the growing prevalence of digital assets. As the ESG imperative –environmental, social and corporate governance– continues to grow, wealth management companies must strive to make educational support and product selection for these profiles key pillars of their strategies.
The report reveals that, globally, 55% of millionaires have declared that investing in causes with a positive impact in terms of ESG is essential, and 64% ask for scores in this type of concept to know the social impact of a monetary Fund. However, 40% of wealth managers consider it difficult to show an impact in this regard.
“The influx of new investment avenues, such as sustainable investing and digital assets, is having a crucial impact on the wealth management industry. Wealth management firms must prioritize proper education around this trend to retain their clients,” said Nilesh Vaidya, Global Head of Retail Banking & Wealth Management, Financial Services Strategic Business Unit. from Capgemini. “Furthermore, as we move into the new era of digital assets, wealth management firms must leverage ecosystem partnerships to prioritize a diversified digital portfolio of client offerings.”
An increasing number of wealth management companies have established a new role as Chief Customer Officer (CCO), which aims to foster relationships with clients and place them at the center of the wealth management process. The duties of the new role are focused on coordinating both data and digital benefits across the organization to meet changing and complex customer demands and drive loyalty.
The report adds that these types of professionals will play an integral role in building an inclusive client ecosystem, while enhancing their advisory capabilities through actionable data analysis. In this way, companies can work to adopt a one-stop-shop approach to meeting customers’ needs and adapting to their lifestyles and preferences.