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World's rich question high fees with wealth hitting US$74 trillion

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Even before this year's market crash, the wealth-management industry's richest clients were frustrated about fees.

[LONDON] Even before this year's market crash, the wealth-management industry's richest clients were frustrated about fees.

A third of those with more than US$1 million of investable assets were uncomfortable with them in 2019, according to Capgemini's World Wealth Report 2020. Such discomfort will likely rise in today's volatile markets. The survey of more than 2,500 individuals found that about one in five plans to switch their primary wealth management firm in the next year, with high fees the top reason.

It's the latest sign of the pressure the industry is under as clients baulk at costs and digital competitors emerge. The majority of investors weren't satisfied by the quality of personalised information they receive and about three-quarters of those surveyed said they would consider offerings from non-traditional providers like the big tech firms.

The discontent comes even as the rich get richer: The report estimates that the net worth of wealthy individuals climbed to US$74 trillion at the end of 2019, up 8.7 per cent from 2018 and US$46 trillion in December 2012. The population of millionaires reached almost 20 million, including 183,400 with a net worth above US$30 million, versus 18 million in 2018 and just 12 million in 2012.

For the first time since 2012, the Asia-Pacific region didn't lead wealth growth last year - it was North America. The US alone had 5.9 million millionaires at the end of 2019, up from 5.3 million in 2018 and more than any other country. Japan followed, with 3.4 million millionaires, followed by Germany, China and France.

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The wealthy favoured equities in the first two months of 2020. They allocated 30 per cent of their assets to stocks, compared with 17 per cent to fixed income, 15 per cent to real estate, 13 per cent to alternative investments and 25 per cent in cash.

The survey did flag some promising growth areas for wealth managers. Those under 40 were far more likely to be willing to pay for value-added services such as real estate investment advice and tax planning. Sustainable investing is another bright spot, especially for the richest investors.

 

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