The eighth annual World Wealth Report published in June by Merrill Lynch and CapGemini, says that, globally, HNWIs are moving from the safe haven of cash. The report highlights a move away from simple wealth preservation, to actively seeking growth.
Made aware of risk by equity market falls, HNWIs are looking for non-correlating assets. This is evidenced by the global movement into hedged vehicles and even collectibles. Although relatively small in total assets, both classes are now considered to be mainstream.
Rich families expect advisers to design very long-term succession plans to avoid tax burdens. However, traditional advisers lack the broad skills needed to manage such portfolios. Furthermore, for customers in the high net worth bracket, a half-yearly wealth check is simply not enough.
In 2003, 7.7 million worldwide fell into this group (individuals with in excess of $1m in disposable assets), up 7.5% on 2002.
HNWI financial wealth is expected to increase 7% a year, from $28,800bn in 2003 to over $40,700bn by 2008. To serve this market effectively, says CapGemini, institutions must continue to develop new sophisticated service delivery technology to counter a growing shortfall in family office professionals.
