Germany remains in fourth place worldwide in terms of net wealth.
(Photo: imago images/Panthermedia)
Frankfurt The bottom line is that Germans have become somewhat poorer in the past year. Their net worth fell slightly to $19.2 trillion in 2022, down 1.1 percent. These include financial assets over $8.8 trillion and real assets over $12.7 trillion, which are offset by liabilities of almost $2.3 trillion.
More than 40 percent of the financial assets in the country are in savings accounts or are kept as cash – and the trend is rising. That is almost ten percentage points more than the global average. This is followed by insurance and pension entitlements as well as shares and funds, with the latter two accounting for 22 percent.
According to the Global Wealth Report 2023, Germany remains fourth in the world in terms of net wealth, behind Japan, China and the USA Strategy consultancy Boston Consulting Group (BCG).
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Global financial wealth also fell for the first time in almost 15 years – by 3.5 percent to $255 trillion. Investors from Europe and North America were particularly hard hit. The last time there was such a slump was during the global financial crisis in 2008.
Despite falling financial assets, total net worth rose slightly by 0.3 percent to $459 trillion. This is due to higher real assets, including real estate, precious metals and other physical assets, which increased by over five percent in 2022.
The main reasons for the falling financial assets were higher interest rates and a volatile macroeconomic environment caused by the aftermath of the corona pandemic and the war in Ukraine, says Michael Kahlich, Partner at BCG. These developments had a particularly negative impact on the capital markets.
Setbacks hit wealthy investors
The wealthy were particularly affected by falling prices on the capital markets. Almost 62,000 super-rich each have financial assets of more than 100 million dollars, which is about 4,000 fewer than in the previous year. They hold almost 13 percent of the world’s financial assets – excluding real assets.
More than 22,000 such Ultra High Net Worth Individuals (UHNWIs) live in the USA, and almost 7,600 in China. Germany is in third place, with 2,900 super-rich people in this country. They own 21 percent of all financial wealth in the country.
In Germany there are a total of more than 500,000 people who have financial assets of more than one million dollars. Over 66 million people have less than $250,000 in financial assets. “We do not expect a shift in wealth distribution in Germany in the next five years,” says co-author Akin Soysal, also a partner at BCG in Zurich.
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As macroeconomic uncertainty increases, wealth flows across national borders also increase. So-called cross-border assets grew by 4.8 percent to twelve trillion dollars worldwide in 2022. Geopolitical tensions and other macroeconomic forces have prompted many investors to shift assets, Kahlich says. The most important financial centers for money from abroad are Switzerland, Hong Kong and Singapore. More and more money is also flowing into the Arab Emirates.
Wealth growth despite global crises
Despite the global crises of recent years and the war in Ukraine, global assets have proven to be comparatively resilient – and Kahlich expects further growth for the current year. BCG experts expect financial assets to increase by around five percent to $267 trillion in 2023. In the medium term, too, global wealth would continue to grow, by five percent annually by 2027 to almost $600 trillion. BCG expects the strongest growth in financial assets in China and India. In Germany, wealth is expected to grow by 4.4 percent per year.
The rare combination of declining bond markets and falling stock prices had a significant impact on the performance of wealth managers in 2022, according to BCG, which saw a 11.7 percent slump in client business volume globally. “In order to be prepared for the future, asset managers should on the one hand increase sales and on the other hand be courageous and reduce costs, for example by significantly improving their efficiency in investment advice through the use of digital solutions,” says BCG manager Soysal.
According to a study by the consulting firm Capgemini, however, some investment advisors are currently having problems with digitization. Deficiencies in this area prevented the service providers from advising their customers promptly and comprehensively, which ultimately affects their profitability.
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