BrazilRising Asian affluent class keenest on Big Tech wealth management
The latest global wealth report from digitally-minded consulting firm Capgemini has found that the fortunes and number of wealthy individuals are growing most rapidly in the Asia Pacific, with the wealthy in the region also among the keenest on future wealth management offerings from the world’s biggest tech firms.
Capgemini’s World Wealth Report for 2018 assessed the current status of high net wealth individuals (HNWIs – those with investable assets above $1 million excluding primary residences and collectibles), determining that the collective worth of the world’s wealthiest grew over 10 percent last year to a total of more than $70 trillion – projected to crack the $100 trillion mark by 2025 should the Asia Pacific continue with its momentum.
By region, the Asia Pacific saw the greatest HNWI wealth growth last year, at 14.8 percent – commanding over a fifth of the world’s HNWI wealth at $21.6 trillion. Likewise, the Asia Pacific welcomed the greatest number of newly wealthy individuals, with over 660 thousand new HNWIs added to the region of the 1.6 million fresh members worldwide – above 40 percent of the world’s total – taking Asia Pacific’s number to 6.2 million HNWIs (more than a third of the global figure of 18.1 million).
In terms of HNWI wealth growth, the Asia Pacific pulled in over 40 percent of the worldwide gains also – totaling $2.8 trillion of the $6.7 trillion worldwide sum. As for individual Asian nations, India was the fastest growing market globally, with above 20 percent growth for HNWI population (now 11th worldwide) and wealth, while China and Japan remained the regional powerhouses – together now accounting for 71.5 percent of the region’s HNWI population and 69.5 percent of its wealth, with wealth growth exceeding 10 percent in both countries last year.
Altogether, last year marked the sixth consecutive year of gains for the world’s wealthiest individuals, with investment returns above 20 percent for the second year running. Despite this, just over half of the wealthy respondents felt well connected to their wealth managers. HNWIs in the Asia Pacific (exc. Japan) reported the highest levels of returns – yet, certain countries within the region and the region collectively expressed some of the most dissatisfaction with the wealth management and the market status quo.
The majority of HNWIs it seems would prefer a broader number of services from their wealth managers and greater personalised advice – as well as a closer personal bond. Nearly 90 percent of Asia Pacific HNWIs expressed interest in a better wealth manager match-making system. Yet, somewhat contrarily, on the surface at least, HNWIs in Asian countries hog the top spots when it comes to interest in the wealth management offerings from Big Tech firms – given as a matter of when rather than if.
Respondents in India, Indonesia, Malaysia, and China all expressed interest at above 70 percent in trusting their assets to either Google or, in the latter’s case, Alibaba – with Apple and Microsoft following closely behind. In terms of the percentage of assets HNWIs would be willing to invest with Big Tech systems, the Asia Pacific (exc. Japan – which overall expressed close to the least interest) returned the highest figures of 28.4 percent for the 31 - 50 percent of wealth bracket, and 13.2 percent for the 51 – 70 percent bracket.
Overall, the figures may reflect the importance of hybrid advice – which combines human wealth managers and online tools – to HNWIs, and specifically those in the Asia Pacific (and Latin America), along with the declining satisfaction as to the current models offered and speed of the transition. For the Asia Pacific (exc. Japan), 68 percent of HNWIs stated the high importance of hybrid advice (compared to the global figure of a fraction above fifty percent), while satisfaction levels as to the current hybrid advisory services dropped 5.1 points globally in Q1 2018 to 57.3%.
Taken together, the message is clear; investment firms will need to reassess their models and get a move on in terms of transformation if they are to have any hope in fending off the coming Big Tech encroachment, driving their own hybrid innovation with investments into technologies such as roboadvisory, automation and artificial intelligence. The Capgemini report concludes with a telling quote from Alibaba co-founder and Executive Chairman Jack Ma: “If the banks don’t change, we’ll change the banks.”
