The next five years have the potential to usher in a wave of prosperity for individuals and wealth managers alike, said Ashish Garg, a member of BCG’s Center for Digital Government,
COVID-19 pandemic aside, financial wealth in India grew by 11 percent per annum to $3.4 trillion between 2015 and 2020, a new report ‘Global Wealth 2021: When Clients Take the Lead‘, by the Boston Consulting Group (BCG) showed.
It further expects that over the next five years, India will likely “significantly expand wealth” through the health crisis to lead percentage growth of fortunes worth $100 million in 2025.
“The next five years have the potential to usher in a wave of prosperity for individuals and wealth managers alike. They now have a chance to put that perspective into practice in their own work and pursue a client agenda,” said Ashish Garg, a member of BCG’s Center for Digital Government, and a core member of the Financial Institutions and Public Sector practices.
Here are the key growth figures for India as per the report:
- Financial wealth in India grew by 11 percent per annum to $3.4 trillion between 2015 and 2020
- Over the next five years, India will likely “significantly expand wealth” through the health crisis to lead percentage growth of fortunes worth $100 million in 2025
- Financial wealth in India is expected to grow by 10 percent p.a. to $5.5 trillion by 2025.
- India represents 6.5 percent of its region’s financial wealth in 2020
- It also represents 13.7 percent of the region’s real assets – a number which grew by 12.1 percent p.a. to $12.4 trillion from 2015-2020.
- Liabilities, which grew by 13.3 percent p.a. to $0.9 trillion and which are expected to grow by 9.4 percent p.a. to $1.3 trillion by 2025.
- Currency and deposits are the largest asset class and makes up 47 percent of total personal wealth in 2020
- Bonds, which are expected to grow the fastest with 15.1 percent p.a.
- Life insurance and pensions, which will be the third largest asset class in the future.
- India’s cross-border wealth, which is expected to grow at 6.3 percent.
Here are the key growth figures globally, as per the report:
- North America, Asia (excluding Japan) and Western Europe will be the leading generators of financial wealth globally, accounting for 87 percent of new financial wealth growth worldwide between now and 2025.
- Many wealth management clients in 2020 embraced alternative investments for higher returns, and thus real assets, led primarily by real estate ownership, reached an all-time high of $235 trillion.
- Asia, which has the largest concentration of wealth in real assets ($84 trillion, 64 percent of the regional total) will see financial asset growth exceed real asset growth (7.9 percent versus 6.7 percent) in coming years.
- Investment funds in Asia will become the fastest-growing financial asset class, with a projected compound annual growth rate (CAGR) of 11.6 percent through 2025.
The report also identified “attractive markets” for wealth managers:
– Simple-needs segment with standardised set of products: where 331 million individuals worldwide with simple investment needs and financial wealth hold $59 trillion in investable wealth, and have the potential to contribute $118 billion to the global wealth revenue pool.
– Retirees: one of the world’s fastest-growing demographics who own $29.3 trillion in financial assets which is expected to grow at a CAGR of close to 7 percent over the next five years, allowing wealth managers globally to target nearly $41.1 trillion in financial wealth by 2025. In fact, by 2050, .5 billion people globally will fall into the 65+ category, representing an enormous source of wealth.
– “Ultra” wealth category: now includes a 60,000-strong cohort, which has seen year-on-year growth of 9 percent since 2015 and currently holds a combined $22 trillion in investable wealth, 15 percent of the world’s total.