Global financial wealth reached a record high of $530trn in 2021 despite continued crises, Boston Consulting Group (BCG) stated in its latest annual report on the global wealth management industry.
Strong equity markets and a surge in demand for real assets, including wine, art and property, drove the 10.6% increase in global wealth, the report said.
The wealth assets are likely to rise in value in all regions despite the current geopolitical and economic destabilisers, including the Ukraine crisis and invasion, according to BCG.
Approximately $80trn in new wealth is expected to be created in the next five years, it said.
BCG wealth management segment global leader Anna Zakrzewski noted: “Wealth development is resoundingly resilient, and even against the backdrop of geopolitical turmoil the growth rate will remain positive.
“Although this stability provides tremendous opportunity for wealth managers, they must make strategic choices to remain competitive. Wealth clients are looking for next-generation offers and next-level service—including net zero, crypto, personalisation, and digitisation.”
Asia-Pacific is expected to record the fastest rates of wealth growth, with asset values set to rise by a compound annual growth rate (CAGR) of 8.4% through 2026.
The region could hold to about one-quarter of the global wealth by 2026 if the CAGR rates hold up, the report said.
Wealth in the Middle East and Africa is expected to increase by a CAGR of 5.4% over the next five years while North America is likely to see a slower phase in wealth growth with an estimated CAGR of 4.7% through 2026.
In Western Europe, wealth growth is expected to slow from around 4.5% over the past five years to less than 4% annually until 2026.
The report also predicts that Sustainable investing could account for 8% to 17% of privately invested wealth by 2026 compared with the current 4% to 11%.
The market capitalisation for crypto is expected to increase four- to fivefold by 2030. BCG said that about 80% of clients surveyed said that they would beef up their crypto holdings if advisory and education services were provided by wealth managers.
Zakrzewski noted: “Traditional wealth managers have known for years that they need to accelerate the pace of their own digitisation.
“Now they have an additional incentive to emulate the practices of these digital leaders as they look for ways to secure future growth and increase their value to clients.”