Refinements were made in such areas as how private wealth is defined, the comprehensiveness of data on wealth distribution among client segments and regions, and how future global wealth is estimated.
Advertisement
In our discussion of shifting client needs, we particularly look at how demographic and socioeconomic trends are setting the stage for the rise of nontraditional client segments – now underserved or rising in importance – that do not necessarily fit the standard, net-worth-based service approach.
“Such approaches no longer allow wealth managers to capitalise on the full potential of the market”.
The report attributes this overall slowdown in 2015 to two key factors – a slowdown in global economic growth as measured by GDP, and lower financial market performance. The top category of ultra-high net worth households (those with more than $US100 million) saw wealth rise by 7 per cent in 2015 (in Asia-Pacific, this group saw a staggering 21 per cent increase in wealth). All regions except Japan experienced slower growth than in 2014, BCG reported. BCG stated that assuming equity markets regain momentum, private wealth globally is expected to rise at a compound annual growth rate of 6% in the next five years to reach $224 trillion in 2020. That compares to 46% of the wealth worldwide that’s held by millionaires.
Global private financial wealth grew by 5.2% in 2015 to $168 trillion.1 (See Exhibit 1.) The rise was less than in the previous year, when global wealth rose by more than 7%.
He adds that central bank efforts to pump quantitative easing into the market since the financial crisis have turned investors towards alternative asset building or relying on inflating housing values.
It says the Asia-Pacific region, combined with Japan, is projected to overtake North America in total private wealth soon after 2020.
And while Switzerland remains the world’s main destination for parking offshore money, both Singapore and Hong Kong are growing much faster in the business, with around 18 per cent of the world’s offshore wealth.
The average revenue and profit margins among wealth managers worldwide has fallen from 2012 to 2015, according to the Boston Consulting Group’s survey of 130 wealth managers cited by the Journal.
Speaking of India’s wealth, the internal asset holding patterns are interesting.
“Although regulatory measures aimed at fighting tax evasion will continue to persuade some old-world investors to repatriate their wealth, regulation also stabilizes the market and provides new opportunities to move fully-taxed wealth offshore in search of better service quality, product diversity, economic stability, and the like”, said Anna Zakrzewski, a BCG partner and a coauthor of the report.
“There are no good investments out there”, he says.
Advertisement
In 2015, the increase of global wealth was triggered by the arrival of new millionaires rather than by the existing fortunes, Boston Consulting researchers said.
