(MoneyControl) The World Wealth Report 2019, published today by Capgemini, found that after seven years of continuous growth, overall global high net worth individual (HNWI) wealth declined by 3% in 2018. Largely due to a drop in wealth in the Asia-Pacific region (specifically China), this decline has resulted in a loss of 2 trillion USD worldwide.
Despite this, wealth management firms maintained stable levels of customer trust and satisfaction throughout the year, though better personal relationships are still key for enhanced performance of firms which can be achieved through effective utilization of next-gen technologies.
The global HNWI population and wealth declined by 0.3% and 3% respectively, with Asia-Pacific hit the hardest. The region represented US$1 trillion of the global decline in wealth, as the HNWI population decreased by 2% and HNWI wealth by 5%. China alone was responsible for more than half (53%) of Asia-Pacific and more than 25% of global HNWI wealth loss.
Despite declining wealth, HNWI’s year-over-year trust and satisfaction in wealth management firms increased by 3 percentage points over already high levels. However, the report revealed significant opportunity for wealth firms to proactively address rising HNWI expectations, as an unsatisfactory service experience was the biggest reason for HNWIs to switch firms in 2018.
BigTechs are expected to be one of the greatest industry disrupters due to their digital capabilities, particularly as fewer than 50% of HNWI clients said they were satisfied with current mobile and online platforms, and 85% demanded more digital interaction when accessing portfolio information.
At the same time, only 62% of HNWIs said they are comfortable with their primary wealth manager’s fees, with many demanding more personalized offerings that focus on greater value creation.
According to the report, investment in next-gen technologies will be critical in order to enhance the client experience. While there is consensus among firm executives and wealth managers that AI is a key game-changer, only 5% of surveyed firms said they had implemented AI strategies across all core areas.
To support sustainable growth within this disruptive environment, firms must pursue the three key strategies of bridging value gaps for wealth managers and clients, redefining IT strategy and leveraging the integrated ecosystem.
“While the volatile economic environment of 2018 led to HNWI wealth decline globally, wealth managers have been extremely successful in maintaining strong levels of client trust,” said Anirban Bose, CEO of Capgemini’s Financial Services and Member of the Group Executive Board.
“However, future success will depend on the agility of wealth management firms to evolve the client experience and find new ways to add value through more personalized services. Next-gen technology and closing expectation gaps will aid this, but the landscape is shifting so quickly that companies must not be afraid to overhaul their strategy and business models if needed.”