Global private financial wealth rose by 5.3% to $166.5 trillion in 2016, up from 4.4% in the previous year, according to the report published by Boston Consulting Group (BCG). The growth was primarily driven by accelerating economic growth and the strong performance of equity markets in many parts of the world.
Asia-Pacific’s private-household wealth grew by 9.5%, the fastest globally, while Western Europe posted modest growth of 3.2% due to uncertainty over Brexit, the report says.
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The level of private wealth in Asia-Pacific is expected to exceed that in Western Europe by the end of 2017, and the combined level of private wealth in Asia-Pacific and Japan is projected to surpass that in North America by 2019.
Wealth in offshore centers grew by 3.7% in 2016 as against 5.4% in onshore centers. Switzerland retained its status as world’s largest offshore center with $2.4 trillion in assets in 2016, with Singapore and Hong Kong holding $1.2 trillion $0.8 trillion, respectively.
However, Switzerland’s share is projected to drop decline through 2021, the report predicts.
“Hong Kong and Singapore remain the fastest-growing offshore centers globally because of both their status as the preferred booking centers for regional clients and the anticipation of strong growth in Asia-Pacific. Expansion is expected to continue in the long term, but China’s ongoing restrictions on investment outflows may slow it down to some degree in the short term,” the report noted.
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By GlobalDataAnna Zakrzewski, a BCG partner and a coauthor of the report, said: “Offshore is not at risk. In the future, despite the expected continued convergence of offshore and onshore, the former will remain a key growth opportunity, particularly in the upper-high-net-worth and ultra-high-net-worth segments.
“Amid much market uncertainty and political instability in many parts of the world, offshore centers will continue to provide a safe haven with excellent overall quality and differentiated wealth management offerings.”
The study also found that wealth managers registered a sharp decline in top-line margins over the past ten years, with return on assets declining across diverse regions and types of players.
“Although a number of institutions have been cutting costs to help mitigate negative trends, many have not commensurately increased investments to help adapt to the new digital environment,” the report further noted.
