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Oct 04, 2017 11:39 AM IST | Source: Moneycontrol.com

DATA STORY: Wealth managers of the super-rich deliver best returns in Asia Pacific

World Wealth Report says that the total wealth of millionaires of the world is expected to reach USD 100 trillion by 2025. HNIs in India rose by nearly 10 percent.

Only 0.22 percent of the world’s population possess almost one-fourth of the total wealth of the world. There are 16.5 million millionaires in the world and they are worth USD 63.5 trillion, according to Capgemini's World Wealth Report 2017.

Interestingly, a mere 1 percent of these millionaires i.e. 157,200 people contribute over one-third of the total worth of High Net-worth Individuals (HNIs). In the last one year, there has been an addition of 1.5 million new HNIs (wealth over USD 1 million).

India’s share in HNIs

The total number of High Net-worth Individuals (HNIs) from India rose by nearly 10 percent over the year. At the end of 2015, India had 200,000 HNIs. In 2016, the number increased to 219,000 as the country added 19,000 HNIs.

India outshines countries like South Korea, Russia, Saudi Arabia and Hong Kong in terms of number of HNIs. However, despite the increase, India contributes a minuscule 1.3 percent of all the millionaires in the world.

Millionaires by country

The US with 4,795,000 HNIs leads the charts accounting for more than one-fourth of total millionaires of the world. It is followed by Japan with 2,891,000 millionaires and Germany with 1,280,000 millionaires. According to the report, the total worth of HNIs is expected to cross 100 trillion by 2025.

Wealth Management Industry

Over 8 percent growth in total wealth of the HNIs over the year was spearheaded by robust returns of 24.3 percent on investment portfolios overseen by wealth managers (eg: mutual funds). The returns on managed funds were much more than passive funds. Investments managed by wealth managers saw the best returns in Asia-Pacific region with a 33 percent appreciation.

Also Read: About 82,000 millionaires shifted overseas in 2016: Report

The growth in portfolio resulted in greater trust in wealth managers across the globe. The industry saw a nearly 20 percent growth in trust and confidence in wealth managers.

Again, the trust was highest in Asia. Over 90 percent respondents from the largest continent of the world said that they had confidence in wealth managers. The trust on financial regulators and regulatory bodies were also the highest among Asian HNIs.

The high returns also cost the investors dearly. As per the report, HNIs across the world, on an average pay USD 65,795 yearly as fees to the wealth managers which roughly amounts to 8.4 percent of their assets under management.

Though the majority of HNIs reflect that wealth managers are important for them, the satisfaction level of HNIs with wealth managers leaves wanting for more. The biggest factor which is the reason for a low satisfaction level is the fees charged by them.

Less than half of the HNIs (47.8 percent) globally agreed that they were fully comfortable with the level of fees charged for wealth management services.

Also Read: How clear thinking helped Dinanath Dubhashi turn around L&T Finance

The low satisfaction level has also prompted the HNIs to try newer options. More than half of the HNIs were willing to tie up with BigTech firms to manage their wealth, especially the younger generation.

As the number of millionaires is growing at a robust pace, the opportunities for wealth management industries are also growing. The advent of technology in the last decade has led to innovation and a greater competition in the field.

Despite the usual worries of privacy and security of data, the efficiency, transparency, access and reliability has lured the HNIs to accept the use of technology in wealth management. The report suggests that a hybrid of traditional management with the help of technology is the best way to go forward.
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