Real estate drives HNWI Aussies
Australia is the ninth largest high net worth individual (HNWI) population in the world with an annual growth of four per cent, according to Capgemini.
Capgemini's World Wealth Report found the market was fifteenth expected to drive HNWI wealth growth through 2025.
Capgemini Australia's financial services practice lead, Philip Gomm, said the historically low interest rates were driving the imperative for higher yielding alternative investments to cash.
"Real GDP [gross domestic product] of 2.3 per cent combined with real estate growth averaging 9.7 per cent in 2015 represented key positive drivers of wealth, thus seeing our HNWI population increase 3.5 per cent across 2014-2015 to a total population of 226,400 by our estimates," Gomm said.
"As wealth firms and wealth managers face a number of converging market dynamics, including increased competition from fintechs, firms need to be making progress on all aspects of their digital capabilities to ensure they remain relevant to clients."
He said one-third of HNWI wealth was being managed by wealth managers globally and there was a significant opportunity for managers to expand share of HNWI's investable assets, increasingly through the leverage of better digital solutions.
The report also found the top three services HNWIs looked for when choosing a wealth management firm were investment advice (47 per cent), financial planning expertise (40 per cent), and investment access (40 per cent).
"...the report found almost half of HNWIs (48 per cent) are focused on investing for growth. Because a growth approach involves a tendency to hold more assets in alternative investments, wealth management firms may need to broaden their investment expertise beyond equities," the report said.
"Finally, HNWIs are also starting to favour pay-for-performance fee models, requiring firms to examine their more traditional fee approaches."
The report said while globally in 2015, HNWI wealth only saw a modest growth of four per cent, wealth in Asia-Pacific grew at an aggressive 10 per cent. This propelled Asia-Pacific into the lead region with the most HNWI wealth globally.
Recommended for you
Sequoia Financial Group has declined by five financial advisers in the past week, four of whom have opened up a new AFSL, according to Wealth Data.
Insignia Financial chief executive Scott Hartley has detailed whether the firm will be selecting an exclusive bidder for the second phase of due diligence as it awaits revised bids from three private equity players.
Insignia Financial has reported a statutory net loss after tax of $17 million in its first half results, although the firm has noted cost optimisation means this is an improvement from a $50 million loss last year.
With alternative funds being described as “impossible” for fund managers to target towards advisers without the support of BDMs for education, Money Management explores the evolving nature of the distribution role.
