HNW wealth levels reach another record high: report

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.

HNWIs took on a more global mindset with their wealth in early 2014, the report suggests, 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.

While cash levels remained high at 27 per cent, allocations to alternative investments increased by three percentage points to represent 13 per cent of portfolios. There was a clear shift towards wealth growth among ultra-HNWIs (those with investible assets of US$30 million or more) 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).

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.

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).

“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.