PARIS: The world has never had so many rich people and their investments in soaring stock markets have made them wealthier than ever recorded, according to a study published on Wednesday.

The number of “high net worth individuals” (HNWI) — defined as people with liquid assets of at least $1 million — rose by 5.1 per cent last year to 22.8 million, according to consulting firm Capgemini.

Their total wealth reached $86.8 trillion in 2023, a 4.7 per cent increase from the previous year, according to the annual World Wealth Report.

The number of HNWI and their total wealth are the highest since Capgemini began the annual study in 1997.

Their fortunes have risen as stock markets have surged: New York’s tech-heavy Nasdaq soared 43pc in 2023 while the broad-based S&P 500 gained 24pc. The Paris CAC 40 grew 16pc while the Frankfurt DAX advanced by 20pc.

Report says today’s wealth management landscape is more challenging than ever

The number of HNWI and their wealth had each fallen by more than 3pc in 2022, a year of macroeconomic uncertainty and geopolitical tensions, the report said. The decline in their wealth was the steepest in a decade as equities fell.

“However, 2023 brought economic growth and improved fortunes for major investment sectors to reverse the falloff,” the report said.

“Despite ongoing interest rate uncertainty and rising bond yields, equities surged along with the tech market, fueled by enthusiasm for generative AI and its potential impact on the economy.” Rising wealth and inequality in the world have fuelled debates on making the rich pay their fair share of taxes.

Brazil and France have pressed fellow G20 countries to set a global minimum tax on the world’s wealthiest people.

Intelligent strategies for winning with the ultra-wealthy: Bridge wealth management and family office strengths to fuel growth.

Today’s wealth management landscape is more challenging than ever: even as high-net-worth individual (HNWI) prosperity rebounds, geopolitical uncertainties, market volatility, and a fiercely competitive environment are putting pressure on wealth management industry profits.

The World Wealth Report 2024 reflects the views of 3,119 high-net-worth individuals, including over 1,300 ultra-HNWIs; 75 executives from pure wealth management (WM) firms, universal banks, brokers and dealers, and family offices; and along with survey responses from over 750 relationship managers across North America, Europe, and Asia-Pacific.

Key findings include: Rebounding markets and a brighter outlook lifted 2023 global HNWI wealth by 4.7pc, and HNWI population numbers increased by 5.1pc. While growth was seen across all wealth bands, the ultra-HNWI segment (investors with over $30 million) enjoyed the most robust recovery in dollar terms.

By integrating behavioural finance with artificial intelligence, WM firms can better recognise and address HNWI client needs; and Gen AI can aid hyper-personalisation of relationship manager/client experiences and communications.

Traditional WM firms must balance competition and collaboration with family offices to scale up engagement with ultra-HNWIs: a collaborative ecosystem of partners to create a one-stop shop is key to success with this complex and lucrative client segment.

Published in Dawn, June 6th, 2024

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