Asia-Pacific narrows North America's lead in High Net Worth Population to less than 10,000
TORONTO and PARIS, June 18, 2014 /CNW/ - Improving economic and equity market performance helped add 1.76 million people to the global High Net Worth Individual (HNWI)1 population in 2013, while the investable wealth of HNWIs grew by nearly 14 per cent to reach a record high of US$52.62 trillion, according to the World Wealth Report 2014 (WWR) released today by Capgemini and RBC Wealth Management. The report notes that the 15 per cent increase in HNWI population in 2013 is the second-largest since 2000, surpassed only by immediate post-crisis catch-up growth of 17 per cent in 2009.
North America and Asia-Pacific remained in a close race for the world's largest HNWI market by population in 2013, with growth in Asia-Pacific narrowing North America's lead to less than 10,000 individuals. North America's HNWI population expanded by 16 per cent to 4.33 million, while Asia-Pacific's grew by 17 per cent to reach 4.32 million. North America remains the wealthiest region, increasing its HNWI wealth by 17 per cent to reach US$14.88 trillion, though this growth was again outpaced by Asia-Pacific, where HNWI wealth expanded by 18 per cent to US$14.20 trillion. In Canada, the total number of HNWIs increased by 7.2 per cent to reach 320 thousand and their wealth by 9.1 per cent to reach US$979 billion. Europe's HNWI population grew by 12 per cent to reach 3.83 million and their wealth by 14 per cent to reach US$12.39 trillion, both significant increases from the previous two years. Latin America was again an exception to strong global growth, with increases of four per cent in population and two per cent in wealth, due to slow GDP growth and challenged equity markets.
"Overall, 2013 was another strong year for the High Net Worth market, with surging equity markets and improving economies contributing to double digit growth in both population and wealth levels," said M. George Lewis, group head, RBC Wealth Management & RBC Insurance. "Looking at longer term growth trends, nearly 40 per cent of the current level of High Net Worth wealth has been created in the past five years alone."
1 HNWIs are defined as those having investable assets of US$1 million or more, excluding primary residence, collectibles, consumables, and consumer durables.
HNWIs show increased global investment mindset, ultra-HNWIs shift focus to growth
HNWIs took on a more global mindset with their wealth in early 2014 allocating over one-third (37 per cent) of their assets outside of their home region, up from one-quarter (25 per cent) the year prior, according to the Global High Net Worth Insights Survey in the WWR,2 capturing feedback from more than 4,500 HNWIs. While cash levels remained high at 27 per cent, allocations to alternative investments3 increased by three percentage points to represent 13 per cent of portfolios. There was a clear shift towards wealth growth among ultra-HNWIs4 who reduced their focus on wealth preservation from 45 per cent to 28 per cent, in favour of growth (31 per cent, up from 18 per cent).
Confidence in wealth management industry climbs, but firms have more to do to meet HNWI needs
HNWI trust and confidence in the wealth management industry surged, with about three-quarters expressing high levels of trust in wealth managers and firms in early 2014, up from 61 per cent the year prior. Confidence in financial markets and regulatory bodies also increased, up to 58 per cent from 45 per cent, and 56 per cent from 40 per cent respectively. HNWIs remain optimistic about their future prospects, with 77 per cent feeling confident in their ability to generate wealth in the near future.
Despite strong wealth growth and increasing confidence levels, HNWIs gave their wealth managers lower performance ratings than last year, down by four percentage points to 63 per cent in early 2014. The most substantial drop in ratings was in North America, at seven per cent, but this market continues to maintain the highest performance score of all regions with a 77 per cent rating, ahead of Middle East and Africa (69 per cent), Asia-Pacific excluding Japan5 (68 per cent), Latin America (67 per cent), Europe (59 per cent) and Japan (46 per cent).
Looking at how HNWIs want to be served by firms, they prefer to seek professional advice (34 per cent versus 21 per cent not seeking advice), work with a single firm (41 per cent versus 12 per cent multiple firms), and receive customized services (29 per cent versus 24 per cent standardized services). While HNWIs continue to prioritize direct contact with their wealth manager (30 per cent), versus digital contact (26 per cent), digital is gaining prominence, with almost two-thirds of HNWIs expecting most or all of their wealth management relationship to be run digitally within the next five years.
"Even though we are seeing an encouraging environment of high growth and confidence, declining wealth manager performance scores indicate opportunities still exist for firms to tailor their offerings to better meet client needs," said Jean Lassignardie, chief sales and marketing officer, Capgemini Global Financial Services. "One way to address the evolving demands of current and future clients is to provide digital capabilities that move beyond simply having a digital presence, to offering an integrated and seamless client experience that incorporates digital at all touch points."
2 Capgemini, RBC Wealth Management, and Scorpio Partnership Global HNW Insights Survey 2014
3 Alternative investments include: structured products, hedge funds, derivatives, foreign currency, commodities, and private equity
4 For survey purposes, we have used the bracket of US$20 million and above in financial assets as our upper wealth band. The definition of ultra-HNWI remains US$30 million and above. For analysis purposes, the upper survey band serves as a reliable proxy for ultra-HNWIs.
5 Asia-Pacific (excluding Japan) refers to Australia, China, India, Hong Kong, Singapore, Indonesia and Malaysia
HNWIs Seeking to Make a Positive Impact on Society
This year's WWR also highlights that the vast majority (92 per cent) of HNWIs feel that investing their time, money or expertise to make a positive social impact is important to them, with 61 per cent describing it as very or extremely important. Globally, HNWIs are looking to firms to play a greater role in supporting their social impact objectives.
Future wealth growth expected to accelerate with an additional $12 trillion generated by 2016
Looking ahead, global HNWI wealth is forecast to reach a new high of US$64.3 trillion by 2016, representing 22 per cent growth from 2013 levels and approximately US$12 trillion in new wealth. Robust growth is expected in most regions, with Asia-Pacific at the forefront with an anticipated 9.8 per cent annual growth rate, positioning the region to be the largest HNWI market by population in 2014 and by wealth by 2015.
The World Wealth Report 2014
The World Wealth Report from Capgemini and RBC Wealth Management is the industry-leading benchmark for tracking high net worth individuals (HNWIs), their wealth, and the global and economic conditions that drive change in the Wealth Management industry. This year's 18th annual edition includes findings from the most in-depth primary research works available on global HNWI perspectives and behaviour. Based on responses from over 4,500 High Net Worth Individuals across 23 countries, the Global HNW Insights Survey explores HNWI confidence levels, asset allocation decisions, perspectives on driving social impact, as well as their wealth management advice and service preferences.
For more information, explore the interactive report website at www.worldwealthreport.com.
With more than 130,000 people in over 40 countries, Capgemini is one of the world's foremost providers of consulting, technology and outsourcing services. The Group reported 2013 global revenues of EUR 10.1 billion. Together with its clients, Capgemini creates and delivers business and technology solutions that fit their needs and drive the results they want. A deeply multicultural organization, Capgemini has developed its own way of working, the Collaborative Business ExperienceTM, and draws on Rightshore®, its worldwide delivery model. Learn more about us at www.capgemini.com.
Rightshore® is a trademark belonging to Capgemini
About Capgemini's Financial Services Global Business Unit
Capgemini's Global Financial Services Business Unit brings deep industry experience, innovative service offerings and next generation global delivery to serve the financial services industry. With a network of 24,000 professionals serving over 900 clients worldwide Capgemini collaborates with leading banks, insurers and capital market companies to deliver business and IT solutions and thought leadership which create tangible value. More information is available at: www.capgemini.com/financialservices.
Connect with our wealth management experts in the Financial Services section of Capgemini Expert Connect at http://www.capgemini.com/experts/financial-services.
The World Wealth Report 2014 and other Capgemini thought leadership is available for your iPad through Capgemini's Financial Services Insights app. Download it through iTunes at https://itunes.apple.com/us/app/capgeminis-financial-services/id668885174?mt=8.
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About RBC Wealth Management
RBC Wealth Management is one of the world's top 10 largest wealth managers*. RBC Wealth Management directly serves affluent, high-net-worth and ultra-high net worth clients in Canada, the United States, Latin America, Europe, the Middle East, Africa, and Asia with a full suite of banking, investment, trust and other wealth management solutions. The business also provides asset management products and services directly and through RBC and third party distributors to institutional and individual clients, through its RBC Global Asset Management business (which includes BlueBay Asset Management). RBC Wealth Management has more than C$690 billion of assets under administration, more than C$426 billion of assets under management and approximately 4,400 financial consultants, advisors, private bankers, and trust officers. For more information, please visit www.rbcwealthmanagement.com.
Royal Bank of Canada is Canada's largest bank, and one of the largest banks in the world, based on market capitalization. We are one of North America's leading diversified financial services companies, and provide personal and commercial banking, wealth management services, insurance, investor services and capital markets products and services on a global basis. We employ approximately 79,000 full- and part-time employees who serve more than 16 million personal, business, public sector and institutional clients through offices in Canada, the U.S. and 42 other countries. For more information, please visit rbc.com.
RBC supports a broad range of community initiatives through donations, sponsorships and employee volunteer activities. In 2013, we contributed more than $104 million to causes worldwide, including donations and community investments of more than $69 million and $35 million in sponsorships. Learn more at www.rbc.com/community-sustainability.
*Scorpio Partnership Global Private Banking KPI Benchmark 2013. In the United States, securities are offered through RBC Wealth Management, a division of RBC Capital Markets, LLC, a wholly owned subsidiary of Royal Bank of Canada. Member NYSE/FINRA/SIPC.
Image with caption: "Nearly Two Million Individuals Join High Net Worth Ranks As Wealth Levels Reach Another Record High: World Wealth Report 2014 (CNW Group/Capgemini)". Image available at: http://photos.newswire.ca/images/download/20140618_C7684_PHOTO_EN_41544.jpg
Image with caption: "Nearly Two Million Individuals Join High Net Worth Ranks As Wealth Levels Reach Another Record High: World Wealth Report 2014 (CNW Group/Capgemini)". Image available at: http://photos.newswire.ca/images/download/20140618_C7684_PHOTO_EN_41545.jpg
For further information:
Courtney Finn (North America)
Weber Shandwick for Capgemini
+1 952 346 6206
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Weber Shandwick for Capgemini
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RBC Wealth Management Contacts:
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