After seven years of growth, the combined wealth of millionaires around the world dropped in 2018 by 3 per cent or just about US$2 trillion to the current figure of just slightly more than US$68 trillion.
The number of millionaires – defined as having investable assets of US$1 million or more, excluding primary residence, collectibles, consumables, and consumer durables – also decreased 0.3 per cent to 18 million last year.
According to the latest World Wealth Report released by Capgemini, a Paris-based consultancy and technology services firm, the large decrease in wealth was largely driven by a slump in the equity markets and slowing economies in key regions.
Asia Pacific accounted for 50 per cent of the global wealth decline of US$1 trillion, and half of that was driven from China following a significant deceleration in economic growth in 2018. Its stock markets declined almost 27 per cent, and it had one of the lowest-performing real estate markets.
Europe also experienced a noticeable dip in millionaires’ wealth of about US$500 billion or about 24 per cent.
North America was flat in the number of millionaires (5.7 million); their combined wealth dropped 1.1 per cent to US$19.6 trillion.
The only region to see positive growth is the Middle East, which recorded an increase in its millionaire population and wealth by 6 per cent and 4 per cent respectively.
The number of ultra-high-net-worth individuals, those who have investable assets of at least US$30 million, dropped 4 per cent to 168,100 in 2018, according to the report. That said, they contributed to 75 per cent of the lost wealth.
Similar to the previous year, the markets with the largest high-net-worth individual (HNWI) populations – the United States, Japan, Germany, and China – represented 61 per cent of the total global HNWI population.
Despite this, wealth management firms maintained stable levels of customer trust and satisfaction throughout the year, though better personal relationships are still key for enhanced performance of firms which can be achieved through effective utilization of next-gen technologies. As wealth industry evolves and HNWI expectations shift, key opportunities exist for wealth management firms to better meet rising client expectations around personalized offerings, service quality and fee transparency.
Capgemini’s report was based on a survey of 2,500 millionaires globally.