The Asia-Pacific region registered world-leading levels of high net worth individual (HNWI) population and wealth growth in 2013, according to the Asia-Pacific Wealth Report 2014 (APWR) by Capgemini and RBC Wealth Management.
The region’s population of HNWIs grew 17 per cent to 4.3 million, while their wealth grew 18 per cent to reach USD14.2 trillion, compared to growth rates of 13 per cent and 12 per cent respectively in the rest of the world.
“While equity market performance across Asia-Pacific was mixed in 2013, strong economic growth and real estate prices in key markets drove healthy overall wealth growth,” says M George Lewis, group head, RBC Wealth Management & RBC Insurance. “Asia-Pacific is expected to continue to lead global growth and pass North America as the region with the highest HNWI population by the end of 2014 and the greatest HNWI wealth by 2015.”
Japan and China, which hold over two thirds of Asia-Pacific’s HNWI population, drove 85 per cent of the HNWI population growth in 2013, increasing their number of HNWIs by 22 per cent and 18 per cent respectively to reach 2.3 million and 758,000. They also saw HNWI wealth increase at the region’s highest rates of 24 per cent to USD5.5 trillion (for Japan), and 20 per cent to USD3.8 trillion (for China).
The report notes that Asia-Pacific’s ultra-HNWIs grew their wealth at about twice the rate of their peers in the rest of the world, both in 2013 (20 per cent vs. 10 per cent) and in the five-year period from 2008-2013 (average annual growth rate of 17 per cent vs. eight per cent).
According to the report’s Global HNW Insights Survey, HNWIs in Asia-Pacific (excl. Japan) have the highest trust and confidence levels globally in all aspects of the wealth management industry: 85 per cent expressed high trust in wealth managers, 87 per cent in wealth management firms, 78 per cent in financial markets, and 80 per cent in regulatory institutions. Looking ahead, 88 per cent of Asia-Pacific (excluding Japan) HNWIs are confident in their ability to generate wealth in the near future.
High trust and confidence levels may have contributed to a greater focus on wealth growth (41 per cent) rather than preservation (31 per cent) among Asia-Pacific (excl. Japan) HNWIs. In seeking growth, they significantly increased foreign investment allocations to 43 per cent in early 2014, up from 30 per cent a year prior, with Europe attracting the largest share at 15 per cent, followed closely by North America at 14 per cent. Looking at the make-up of their portfolios overall, real estate remains the preferred asset class of Asia-Pacific (excl. Japan) HNWIs (23 per cent of portfolios), which differs from a preference for equity investments (27 per cent) in the rest of the world.
Asia-Pacific (excl. Japan) HNWIs have distinct preferences in how they are served by firms, as they are more inclined to seek professional advice (45 per cent, the highest globally) and pay for customised services (37 per cent) than HNWIs in the rest of the world (36 per cent and 30 per cent). While HNWIs globally share a preference to work with a single wealth management firm, those in Asia-Pacific (excl. Japan) differ in their preference to work with multiple experts (39 per cent) versus a single point of contact (26 per cent). They also have the highest demand globally for digital interactions, with 82 per cent (versus 61 per cent for those in the rest of the world) expecting most or all of their wealth management relationship to be run digitally in five years.
Despite rising wealth and trust levels and a desire for advice, Asia-Pacific (excl. Japan) HNWIs increased their performance scores of wealth managers by only half a percentage point to 68 per cent in early 2014, although this compares to a drop by five percentage points to 66 per cent in the rest of the world.
“Asia-Pacific offers a ripe environment for firms to establish deeper client relationships and improve performance scores, given the high confidence levels, complex needs, focus on wealth growth, and openness to advice of HNWIs in the region,” says Jean Lassignardie, chief sales and marketing officer, Capgemini Global Financial Services. “Wealth managers and firms will need to evolve their offerings to meet the changing preferences of Asia-Pacific HNWIs in how they interact with their firms and advisors, including through the development of digital channels.”
The report reveals that 97 per cent of Asia-Pacific (excl. Japan) HNWIs feel it is important to invest their time, money or expertise to make a positive social impact, with 81 per cent describing it as very or extremely important (compared to 59 per cent of their peers in the rest of the world).
Asia-Pacific (excl. Japan) HNWIs are driven primarily by a feeling of responsibility to give back and are uniquely focused on food security, which ranked as the top priority cause (vs 12th for those in the rest of the world), with 40 per cent currently giving back in this area. Following food security, health (39 per cent), education (37 per cent), the welfare of children (33 per cent), and the welfare of older people (31 per cent) rounded out their top five causes. Climate change and the environment is also a high priority, with 30 per cent of Asia-Pacific (excl. Japan) HNWIs contributing time or wealth in this area versus 20 per cent of HNWIs in other regions.