Global Wealth 2019: Reigniting Radical Growth by Boston Consulting Group

Another Report of Global Wealth Decline – What Can You Do Now?

What is this Report?

The Global Wealth report is an annual report about the global market sizing and global wealth-management industry. The market sizing review “encompasses 97 markets that collectively account for 98% of the world’s gross domestic product.” The analysis of the wealth-management industry is based on data from over 150 wealth managers.

The Boston Consulting Group (BCG) report uses the following wealth based segments: retail (less than $250K); affluent ($250K-$999K); lower High Net Worth (HNW) ($1M-$19.9M); Upper HNW ($20M-$99M); and Ultra HNW (more than $100M+).

What are key findings from the article?

• Global wealth indicators suggest a slowdown in global wealth. “2018 was the worst year for stocks in a decade” per the report. Global personal financial wealth is slowing down; it only grew by 1.6% in 2018 compared to 7.5% in 2017

• North America saw a -0.4% decline in 2018 while Western Europe saw a modest increase of +0.6%. Asia as a whole saw an increase of +7.1% in asset growth, compared to +11.5% in 2017.

• Although stock was down, the report points out that the last five years showed a “substantial increase in global wealth overall.” Investable assets such as investment funds and equities grew and “now account for 59% ($122 trillion) of all personal financial assets.”

• The number of millionaires are still growing to 22.1 million in 2018 with a rise of 2.1% per year. This group holds 50% of global personal financial wealth. The largest concentration is the North America. Between 2018 and 2023, BCG predicts Asia (excluding Japan) will see the fastest growth in millionaires with 10.1%.

• UHNW individuals with net worth of $100M+ are expected to see their wealth grow the most with an 8.6% increase.

• While many wonder about economic downturn, BCG’s analysis suggests that wealth will have a modest growth rate of 5.7% from 2018-2023 with the concentration in North America and Asia.

• Finally, BCG believes that there is an underserved market in the affluent segment that wealth managers need to do a better job of attracting, serving, and keeping as customers.

What can I do as a result?

• Recognize that there may be a global economic slowdown. In 2018, Capgemini also reported a 3% decline in world wealth; BCG reported a slower growth of 1.6%. There seems to be an impact on giving since Giving USA found that total giving declined by 1.7% in 2018.

• Focus on the affluent wealth segment (net worth of $250K-$1M). In response to the recent Giving USA report, The Chronicle of Philanthropy recommends that nonprofits seek out the smaller-dollar donors. Clearly, fundraising and wealth management organizations have been underserving the affluent wealth segment, which has potential for both industries.

• With increased wealth management guidance, the affluent segment may expect fundraisers to accommodate more complex gifts such as trusts, Donor Advised Funds, and more. Consider how you can improve your capacity for these gifts, whether it is a relationship with a consultant, support from your community foundation, or improved database procedures.

• Gift officers and their institutions should continue to look to build their relationships with Asian constituents and figure out how to be more donor-centric to these populations, just as wealth managers need to be more customer-centric with affluent wealth segments. You might consider targeting continuing education dollars to the subject.

Additional Resources

• World Wealth Report 2019 | Capgemini | 2019
• Global Wealth – Reigniting Radical Growth | Boston Consulting Group | 2019 
• Giving USA 2019 l Giving USA l 2019
• Capital without Borders: Wealth Managers and the One Percent l Brooke Harrington l Harvard University Press | 2016
• What Fundraisers Should Do Next: How ‘Giving USA’ Findings Point to Smart Strategies l The Chronicle of Philanthropy l 2019 (subscription required)