20,900 fewer dollar millionaires lived in Germany last year.
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Frankfurt The turbulence on the financial markets, the weakening global economy and rapidly rising interest rates have left their mark on the fortunes of rich families. The number of high net worth individuals (HNWI) worldwide fell by 3.3 percent to 21.7 million in 2022. The value of their wealth fell 3.6 percent to $83 trillion over the same period.
HNWIs are individuals with investable assets of at least $1 million. In 2022, your wealth shrank more than it had in the previous ten years. This is shown by the latest World Wealth Report by the consulting firm Capgemini.
North America saw the sharpest decline in wealth at 7.4 percent, followed by Europe (3.2 percent) and the Asia-Pacific region (2.7 percent). In contrast, Africa, Latin America and the Middle East showed resilience and recorded increases in 2022. Price developments in the oil and gas industry in particular played a role in favor of exporters.
In Germany, too, the fortunes of millionaires shrank
In Germany, the total wealth of HNWIs fell by 2.2 percent to around $6.14 trillion in 2022. In the same period of the previous year, 2021, it had risen by 7.4 percent.
The number of HNWIs themselves also shrank last year: According to Capgemini, 1,612,100 dollar millionaires lived in Germany in 2022, which is 1.3 percent or 20,900 fewer than in 2021.
According to the study, the distribution of wealth across individual asset classes is also changing: wealthy investors increased their cash holdings and short-term investments in particular from 24 percent in the previous year to 34 percent in January 2023. This is due to the higher interest rates and the relatively low risk, for example with overnight money investments.
The proportion of equities fell from 29 to 23 percent, while the proportion of fixed-income paper fell slightly from 18 percent to 15 percent. Alternative investments such as private equity were little changed at 13 percent and real estate’s share was 15 percent.
“Affluents” are becoming the focus of wealth managers
According to the report, there is long-term growth potential for wealth managers in the area of potential wealth management clients. The segment of wealthy private customers with investable assets between $250,000 and $1 million (“Affluents”, roughly: wealthy) now represents a new target group as it continues to grow in terms of size and financial weight.
Regionally, North America (46 percent) and Asia Pacific (32 percent) have the largest share of these affluent customers by both asset and number.
Although the group of “affluents” has assets of almost $27 trillion, a quarter of traditional wealth managers and a third of universal banks do not deal with this segment. 71 percent of the “affluents” state that they are interested in taking advantage of investment advice from their bank in the next twelve months.
Almost a third of the super-rich want to change their wealth manager
According to the Capgemini analysis, however, some wealth managers are currently struggling with digitization. Deficiencies in this area prevent service providers from advising their customers promptly and comprehensively – which ultimately affects their profitability. On average, only one in three executives rated their company’s digital maturity as high across the entire mentoring cycle.
Overall, this increases the amount of time customer advisors spend on tasks outside of their core activities. Due to a lack of digital maturity, only a third of their time is devoted to customer care, the research shows.
The dissatisfaction is felt on both sides, with nearly 31 percent of HNWIs saying they are likely to switch wealth managers in the next 12 months.
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