The Capgemini Research Institute’s World Wealth Report 2024 reveals that the number of high-net-worth individuals (HNWIs) and their wealth reached unprecedented levels in 2023, driven by a rebound in the global economic outlook.
According to the report, global HNWI wealth grew by 4.7% in 2023, reaching $86.8 trillion.
Similarly, the HNWI population increased by 5.1% to 22.8 million globally, continuing to grow despite market unpredictability.
This upward trend reverses last year’s decline, placing HNWI trends back on a growth trajectory.
HNWI Growth Soars Globally
In 2023, North America saw the strongest HNWI recovery worldwide, with year-on-year growth of 7.2% in wealth and 7.1% in population.
The report attributes this momentum to solid economic resilience, cooling inflationary pressures, and a formidable US equity market rally.
This trend is evident in most markets, albeit to a lesser extent:
The Asia-Pacific HNWI segment experienced wealth and population growth of 4.2% and 4.8%, respectively.
Europe saw more modest growth, with wealth and population increases of 3.9% and 4.0%.
Latin America and the Middle East recorded limited HNWI growth, with wealth up 2.3% and 2.9%, and population up 2.7% and 2.1%.
In contrast, Africa was the only region where HNWI wealth (-1.0%) and population (-0.1%) declined due to falling commodity prices and declining foreign investment.
As HNWI growth thrives, asset allocations are shifting from wealth preservation to growth.
Early 2024 data reveal a normalisation of cash holdings to 25% of portfolio totals, a stark contrast to the multi-decade highs of 34% seen in January 2023.
The report indicates that two out of three HNWIs plan to invest more in private equity during 2024, aiming to leverage potential future growth opportunities.
The Great Wealth Transfer
Ultra-high-net-worth individuals (UHNWIs), who are the most concentrated among the wealth bands, hold over 34% of total HNWI wealth and constitute just over 1% of the total HNWI population.
It is estimated that aging generations will transfer over $80 trillion in the next two decades, fuelling demand for financial (investment management and tax planning) and non-financial (philanthropy, concierge services, passion investments, and networking opportunities) value-added services.
This represents a lucrative opportunity for wealth management firms.
The report reveals that 78% of UHNWIs consider value-added services essential, and over 77% rely on their wealth management firms to support their inter-generational wealth transfer needs.
“Clients are demanding more from their wealth managers and the stakes have never been higher. There are active steps firms can take to engage and retain clients for a personalised, omnichannel experience as the great wealth transfer unfolds and growth of HNWIs continues,” said Nilesh Vaidya, Global Industry Head of Retail Banking and Wealth Management at Capgemini.
“While the traditional way of profiling clients is ubiquitous, the application of AI-powered behavioural finance tools, using psychographics, should be considered. They can offer a competitive advantage by understanding individuals’ decision-making to deliver a greater degree of client intimacy. The creation of channels for real-time communication will be crucial to manage biases that sudden, volatile market movements might trigger.”
By integrating behavioural finance with artificial intelligence, wealth management firms can assess how clients react to market fluctuations and make data-driven decisions that are less susceptible to emotional or cognitive biases.
Methodology
The World Wealth Report 2024 covers 71 countries, accounting for more than 98% of global gross national income and 99% of world stock market capitalisation. The Capgemini 2024 Global HNW Insights Survey questioned 3,119 HNWIs including 1,300+ ultra HNWIs across 26 major wealth markets in North America, Latin America, Europe, Middle East and Asia-Pacific.
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