The number of high-net-worth individuals (HNWIs) and their wealth reached unprecedented levels in 2023, driven by a recovery in global economic outlooks, according to the latest edition of the Capgemini Research Institute’s World Wealth Report 2024.
The market boom in 2023 led to a $3.8 trillion increase in HNWIs. The document reveals that the global wealth of HNWIs grew by 4.7% in 2023, reaching $86.8 trillion, and the HNWI population grew by 5.1% to 22.8 million worldwide, despite market instability.
This upward trend offsets the previous year’s decline and puts HNWI trends back on a growth trajectory, the report explains.
As HNWI growth prospers, asset allocations are beginning to shift from wealth preservation to growth. Early data from 2024 suggests a normalisation of trends regarding cash and equivalents (deposits, money market funds, etc.) to 25% of the total portfolio, a marked contrast to the 34% observed in January 2023.
The report indicates that two out of three HNWIs plan to invest more in private equity during 2024 to take advantage of potential future growth opportunities.
Investment Decisions
More than 65% of HNWIs reveal that emotional or cognitive biases influence their investment decisions, especially during significant life events such as marriage, divorce, and retirement.
As a result, 79% of HNWIs seek guidance from relationship managers (RMs) to help manage these biases.
By integrating behaviour-driven client finance with artificial intelligence, wealth management firms can assess how clients react to market fluctuations and make data-driven decisions less susceptible to emotional or cognitive biases.
The report highlights that AI-based systems can analyse data and detect patterns that may be difficult for humans to recognise, enabling managers to take proactive measures to advise clients.
According to the report, UHNWIs have increased the number of relationships they maintain with wealth management firms from three in 2020 to seven in 2023.
This trend indicates that the sector is struggling to provide the range and quality of services demanded by this segment.
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