A new report1 suggests the wealth of ‘high-net-worth-individuals’ (HNWIs) – grew by 4.7% in 2023, with the HNWI population increasing by 5.1% to 22.8 million globally.
What’s behind the increase?
Global economic uncertainty, higher interest rates and rising political tensions led to significant declines in HNWI wealth (3.6%) and population (3.3%) in 2022. However, the economic picture improved in 2023, as global equity markets recovered and investors focused on the prospect of interest rate cuts.
CapGemini confirmed, ‘Despite ongoing interest rate uncertainty and rising bond yields, equities surged along with the tech market, fuelled by enthusiasm for generative artificial intelligence (Al) and its potential impact on the economy.’ North America led the recovery, with significant HNWI wealth and population increases. Asia-Pacific also saw growth, while Europe experienced more modest gains.
What are their priorities?
As the HNWI population becomes younger, investment priorities have also shifted from defensive investing towards generating longer-term wealth. Value-added services, such as tax planning and intergenerational transfer are increasingly sought after.
What influences their decisions?
Over 64% of HNWIs polled said emotional or cogitative biases influenced their decision making. This includes seeking information from sources that aligned with their views, seizing opportunities without due consideration, holding onto underperforming investments for too long, and playing safe, missing out on potential opportunities.
These biases are particularly impactful during personal life events such as marriage, divorce or retirement, as well as times of broader economic turbulence, such as volatile market conditions and geopolitical uncertainty.
The findings confirm HNWIs need access to good quality, highly personalised financial advice now more than ever. Not only can we help to create bespoke strategies to suit individual and family needs, we can also overcome biases in favour of longer-term financial plans.
1CapGemini, 2024
The value of investments can go down as well as up and you may not get back the full amount you invested. The past is not a guide to future performance and past performance may not necessarily be repeated.
