Global private wealth has hit a speed bump in 2015, reaching $168 trillion, compelling wealth managers to explore fresh strategies to meet customer needs, according to a new report by The Boston Consulting Group (BCG).
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Global private financial wealth in 2015 grew by 5.2%, less compared to the prior year when it increased by more than 7%. Majority of the growth in 2015 resulted from the creation of new wealth instead of the performance of existing assets as several equity and bond markets stayed flat or fell.
According to the study, Global Wealth 2016: Navigating the New Client Landscape, all regions excluding Japan recorded slower growth in 2015 compared to the previous year.
However, number of global millionaire households increased by 6% in 2015, with countries such as China and India recording large increases.
The study however, estimated that if the equity markets regain momentum, global private wealth will increase at a compound annual growth rate of 6% to reach $224 trillion by 2020.
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By GlobalDataThe report further states that offshore private wealth grew by 3% in 2015 to nearly $10 trillion. The rise was driven by repatriation of offshore assets by investors in developed markets.
The biggest growth during the period was recorded in the offshore centres of Hong Kong and Singapore (about 10%). Offshore wealth in these domiciles is anticipated to grow at about 10% per year through 2020, the report stated.
Offshore wealth growth in North America, Western Europe, and Japan dropped by over 3% in 2015.
Switzerland was the largest destination for offshore wealth, accounting for about one-quarter of all offshore assets worldwide.
The report also highlighted two non-traditional client groups-female investors and millennials- whose investment needs call for special attention. Female investors have increased their wealth levels significantly and in 2015, this segment has been found to hold about 30% of global private wealth.
However, only 2% of wealth managers surveyed considered women a specific client segment.
Similarly, overall wealth accumulation for the millennials is steadily on the rise, though 50% of the respondents said that they did not have a clear view on how to address this client segment.
BCG partner and a co-author of the report Daniel Kessler said: "Ultimately, in order to succeed, wealth managers will need to adopt a more client-centric perspective, decide how to sensibly segment their base of current and prospective clients, clearly identify customer needs, and define value propositions accordingly.
"Some wealth managers have already embarked on this journey, partly by leveraging insights from big data, but for most the first step has yet to be taken."
