Tag Archives: wealth report

Get Personal and Deliver Impact: Reviewing Capgemini 2022 World Wealth Report

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By Elisa Shoenberger

What is this report?

Get Personal and Deliver Impact: Reviewing Capgemini 2022 World Wealth Report

The World Wealth Report is an annual report about the wealth of high-net-worth individuals (HNWIs) and the economic conditions in the Wealth Management industry. This year’s report is based on responses from over 2,973 HNWIs in 24 wealth markets, administered in January 2022.

Capgemini defines HNWI as those who have “investable assets of US$1 million or more, excluding primary residence, collectibles, consumables, and consumer durables.”

What are key findings from the article?

  • Wealth increased with a rise in global High Net Worth Individuals (HNWI) of 7.8% and global wealth totals of 8.0%.
  • Following the trend in 2020, North America leads the world on HNWI individuals with 13.2% growth and 13.8% wealth in 2021. Europe comes second, then Asia-Pacific. The report credits the strong performance of the technology sector, specifically Microsoft, Alphabet, Apple, Tesla and Nvidia. US real estate also grew 11%.
  • However, with rising inflation and interest rate hikes, Capgemini estimates that global HNWI wealth declined by 4% from 12/31/2021 to 4/30/2022. North America would be the most impacted followed by Europe.
  • Globally, 55% of HNWI want to make more investments with ESGs (environmental, social, and government). Interestingly, HNWIs in Asia-Pacific (except Japan), Latin America and Europe are most interested in sustainable investments, followed by North America. But millennials are the most interested age group in these types of investments.
  • Cryptocurrencies and other digital assets are still popular. The report noted: “71% of HNWIs globally have invested in digital assets and 91% of HNWIs younger than 40 have investments in digital assets.” Cryptocurrency is their first digital asset, then exchanged-traded funds and the metaverse are next. Morgan Stanley has three funds that allow investors with at least $2M into bitcoin. (Of course, the report was written before the recent extreme volatility of cryptocurrencies and NFTs).
  • Family offices are popular for HNWI. The 10,000 or so family offices manage 8% of the global HNWI wealth, which is about $7 trillion. That is up from $5.9 trillion with 7,300 family offices in the prior year. Even more striking is that HNWIs prefer them to large banks or wealth management firms – by 63%! They prefer them due to “one-stop-shop convenience and personalized services” as well as “reduced service costs.” Emotional connection is also key, something hard to build with banks and wealth management firms.
  • Demographics keep changing. Women, millennials, tech-wealth HNWIs are emerging. The reported noted, “Women across all wealth brackets will inherit 70% of global wealth over the next two generations and will likely manage two-thirds of household wealth by 2030.” But there’s a disconnect with women and wealth management firms.

What can I do as a result?

  • Pay attention to prospects who have family offices or participate in multi-family offices. Family offices are a huge wealth indicator. Family offices deliver investment and wealth management for the family, generally where the family has over $100 million in investable assets. Families with $25M+ in assets are more likely to participate in multi-family offices.
  • Keep in mind rising demographics of wealth. The report noted: ““Women want firms to earn their trust and confidence and support their unique needs,” including returns on their investments and purpose.” The same could be said about women and philanthropy. Women may not want to have transactional relationship with a nonprofit.
  • With the rise in popularity of ESGs, people may see impact investing as a means of giving back. For some prospects, your organization may have to approach them with the general framework of ESGs to “meet them where they are.”
  • Cryptocurrency has had some rough months but there may still be opportunity for philanthropy. Fidelity Charitable reported that in 2021, $331 million in cryptocurrencies was donated to donor advised funds. It will be interesting to see what happens in the next few months. As with stock gifts, it is prudent to convert cryptocurrencies into cash as well as be more mindful of what donations your organization will take. Also, it may be worth looking at other digital assets including digital currencies, exchanged-traded funds and the metaverse.

Additional Resources

Off the Shelf: The Best of Aspire…and Beyond

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Just in case you are not experiencing soaring temperatures outside, let me remind you that it is officially summertime. And that means you need a summer reading list. Allow me to indulge you with Aspire’s!

Off the Shelf and On the E-Reader

At Aspire, we’ve made a habit of writing FREE publications. Like a tourist drawn to a Florida golf course gator (Is it real? Let’s get closer!), we simply must satiate our curiosity on a variety of topics. If you benefit from it, too, we consider that a bonus.

  1. In Good Company: A Guide to Corporate Fundraising banks the #1 spot as the most downloaded publication at Aspire. No surprise really, because it benefits from author, Elisa Shoenberger’s journalist approach to the topic. And, of course, it highlights how prospect research can help you land the big gifts.
  2. Prospect Research Philanthropy and Wealth Report 2021 is like one of those smartphone apps that pick your best eye color or transforms you into a Disney princess. Each year we distill the insights from long, dry, complicated studies and make them short and dressed for action. This year we spotlighted Diversity, Equity, Inclusion, and Cryptocurrencies, just in case you needed even more glam to your philanthropy glow.
  3. Prospect Research Spotlight on Broadway Producers and Investors was born out of the love of the arts. Ask Elisa Shoenberger a question like, “Can you find Broadway producers who might fund our captioning?” and she just can’t let go! Dive deep into the world of funding Broadway shows.

Curious what other publications we have available? “Check out” the complete Publications Library today!

Google Analytics Says… BLOG!

The top blog posts at Aspire might surprise you, but then again, maybe not.

  1. Fidelity Charitable 2020 Giving Report: Inside Donor Advised Funds outranked our coverage of the 2021 Giving Report. We don’t take offense. When it’s good, it’s good, and the 2020 report coverage laid out the demographics of DAF giving and challenged you to take four steps to maximize your fundraising efforts with DAFs.
  2. Capgemini 2021 World Wealth Report is always a winner! How can you go wrong with global trends and asset allocation among HNWIs (high net worth individuals)? London took a nosedive off the top 10 cities list for Ultra-HNWIs in 2021. Egads, supercity! What kryptonite might land in 2022?
  3. Nonprofit KPIs: 5 Key Metrics to Track in 2021 is the first guest post to debut on our top blogs list. It’s written by Gerard Tonti, Senior Creative Developer at Salsa Labs. I bet you a Florida key lime pie that you won’t guess what the #1 KPI is on his list!

If this list leaves you wanting more, join our mailing list and get delicious research candy like this delivered to your inbox monthly. (Even your mother would approve of that dessert frequency!)

Righteous Randomness

  • Nothing gets more web hits than our Free Research Links Directory, and maybe that’s because everyone on the Aspire team uses it? Remember when you were a kid, and you went into a chocolate store for the first time? That’s what this web page is like. Fun little boxes with curated goodies you just. Want. To. Click.
  • Donors: Understanding The Future Of Individual Giving, written by Tim Sarrantonio of Neon One, is fresh off the presses. This is one-stop shopping at its best because he has synthesized and made sense of a long list of published research, each of which happens to be beautifully listed at the end. Best bit? It’s formatted for PDF reading. Bless you, Tim Sarrantonio!

If this reading list doesn’t get you in the mood for summer frolic, I can’t imagine what will. Because fundraising research was meant to be poolside, or beachside, or watching the kids run through the sprinkler-side, or even in the air conditioning with a mocktail. Anywhere you go to let your neurons roam free so you can return to work with new ideas and new perspectives.

Prospect Research Philanthropy and Wealth Report 2021

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February 2022 | Tampa FL

Once again Aspire Research Group LLC has published its annual Prospect Research Philanthropy and Wealth Report, this time with a spotlight on two of the hottest topics in 2021: Cryptocurrencies and Diversity, Equity, and Inclusion.

All year, Aspire’s research team stays current on philanthropy and wealth, including reading through long and cryptic reports compiled by enduring financial institutions such as Fidelity Charitable, Capgemini, Boston Consulting Group.

“We yawn so you don’t have to,” explains Aspire’s Founder and CEO, Jen Filla.

Sources and demographics of philanthropy and wealth are changing. For example, the report notes that London dropped off the list of Top 10 Cities by count of ultra-high-net-worth individuals.

“What we’ve learned is that there’s a lot of wealth and philanthropic opportunities out there, despite all the ups and downs of the past two years,” says Shoenberger.

Aspire has crafted a 20-page report that makes for easy and informative reading, containing just the right amount of information to stay current and make decisions as you cultivate and engage your major gift donor prospects.

Free Download

About Aspire Research Group

Aspire Research Group LLC helps nonprofits leverage fundraising intelligence to change the world. With the right information, Aspire believes that nonprofit fundraising professionals can connect more deeply with donors, include more donors, and fulfill their missions.

Visit www.aspireresearchgroup.com to learn more about Aspire and the report authors, Jen Filla and Elisa Shoenberger.

Charities Aid Foundation (CAF) World Giving Index 2021: a global pandemic special report – June 2021

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What is this Report?

The report is an annual report that looks at global giving focusing on three areas: helping strangers, donating money to charity and volunteering time. The report surveys 1.6 million people interviewed since 2009.

What are key findings from the article?

  • One of fifth of all people around the globe volunteer.
  • Indonesia is number one in generosity. Eight out of ten Indonesians gave to charity and the number of volunteers were three times the global average. The countries in the top ten most generous countries changed dramatically. They are (in order):
    1. Nigeria
    2. Myanmar
    3. Australia
    4. Ghana
    5. New Zealand
    6. Uganda
    7. Kosovo
    8. Thailand
  • The United States, usually in the top five, fell to 19th in 2020. It has significantly declined in all three categories since 2016. Other countries usually in the top ten (United Kingdom, Ireland, Canada, the Netherlands) also dropped out of the top 10. Overall, developing countries are seeing participation in philanthropy increase across the board; developed countries are showing some decline or stalling. The report finds that European countries dominated the list of countries least likely to help a stranger.
  • People were more likely to give to strangers than ever before. More than three billion people (over 55% of total population) helped a stranger in 2020. Six of ten countries that topped the list were in Africa. CAF attributes the high rates of caring for strangers to the African idea of ubuntu “described as the capacity in an African culture to express compassion, reciprocity, dignity, humanity and mutuality in the interests of building and maintaining communities with justice and mutual caring.”
  • Giving is up despite (or because of) the pandemic. 31% of people gave, and volunteer levels were unchanged in 2020.
  • CAF tracks the countries that have increased their World Giving Score in at least four out of the five past years. The Biggest risers are:
    1. Georgia
    2. Paraguay
    3. Ethiopia
    4. Bulgaria
    5. Vietnam
    6. Serbia
    7. Bangladesh
    8. China
    9. Ukraine
    10. India

What can I do as a result?

  • Look beyond the US and Europe if your organization has a global reach. There’s potential for philanthropy from other parts of the world, provided that your mission touches the country in some way. Check out if you have prospects in Indonesia, Kenya and Nigeria. However, the report did not focus on where the philanthropy went —in other words, did the money stay in the country or go elsewhere?
  • There’s money available for philanthropy. This is a theme that has shown up in many recent wealth reports. Some nonprofits were worried about asking for donations during COVID-19, but people still want to give to nonprofits, probably even more, as a result of the pandemic.
  • Think outside the box with your volunteers. Despite the pandemic, volunteerism did not decrease. How can your organization continue to engage your volunteers for your mission? After all, we know that volunteerism makes people feel good and more likely to want to give to your organization.
  • The drop in US in philanthropy is concerning. Consider examining how you are engaging donors — and when and how you are losing donors.

Additional Resources

World Wealth Report 2019 by Capgemini

Fundraising Insights, Wealth & Philanthropy Intel

Global Wealth Declined 3% – Are Major Gifts at Risk?

What is this Report?

The World Wealth Report is an annual report about the wealth of high net worth individuals (HNWI) and the economic conditions in the Wealth Management industry. This year’s report is the 23rd year based on responses from over 2,500 HNWIs in 19 wealth markets, administered between January and February 2019. It measures “HNWI investment behavior including HNWI trust and confidence, satisfaction, comfort level with fees, and personalized services.”

Capgemini defines HNWI as those who have “investable assets of US$1 million or more, excluding primary residence, collectibles, consumables and consumer durables.”

What are key findings?

  • Global High net worth wealth declined 3% in 2018, after seven years of growth. The most affected regions were Asia-Pacific and Europe. North America was mostly flat while the Middle East reported an increase in HNWI population and wealth.
  • 75% of the decline was attributed to Ultra High Net Worth Individuals, decreasing 4% by population and 6% by wealth.
  • Clients want to have an emotional connection with their wealth managers. 28% of HNWI surveyed said that “advisor’s lack of emotional intelligence as the reason they did not connect well.” They are looking for friendly personalities, good listeners, market expertise, risk management expertise and more.
  • In terms of asset allocations, cash became the largest asset class in Q1 2019 due to declining markets. Cash is 28% of HNWI financial wealth, knocking equities to number two. Real estate has been dropped to fourth place, from 16.8% globally in 2018 to 15.8% in Q1 2019. Fixed income is now number three.
  • Top four markets are still the same from 2017 – US, Japan, Germany and China.
  • The world economy seems uncertain due to rising interest rates, the trade war—notably between the US and China, as well as political uncertainty with Brexit and Venezuela, and general market volatility. Notably, CNN called 2018 the worst year for stocks in 10 years.

What can I do as a result?

  • If HNWIs want more emotional connection with their wealth managers, it follows that those traits are necessary for gift officers. In a 2019 article in the Chronicle of Philanthropy, Mark Stuart who was employed by San Diego Zoo Global at the time, advocated for the use of the DiSC personality profile to train gift officers on better connecting with donors and prospects. Being knowledgeable isn’t enough anymore, even when it comes to money. Upgrading your emotional intelligence skills is recommended.
  • While cash is now the largest asset category due to declining markets, HNWIs may be more circumspect about donating their dollars. They may be even more critical in how organizations are using their dollars and it may take more time to communicate the benefits of donating to your organization. However, since North America saw minimal change in total wealth, these concerns may not have taken hold – yet.
  • Real estate has gone down as a percentage of asset class. However, that means those $1M+ houses are now a smaller percentage of giving, which is great for prospect researchers when determining capacity.

Additional Resources

The Wealth Report 2019 by Knight Frank

Fundraising Insights, Wealth & Philanthropy Intel

“How private wealth is shaping property markets globally.”

What is this Report?

The Wealth Report | Knight Frank 2019

The Wealth report is an annual report that looks at how private wealth impacts property throughout the world. It focuses largely on real estate but also talks about luxury items like art, whiskey, and yachts. The report also looks at habits of Ultra High Net Worth (UHNW) individuals.

UHNW is defined as someone with net worth over US$30M. HNW is defined as someone with net worth over US$1 million. Both definitions exclude the primary residence.

What are key findings from the article?

  • Wealth continues to become more global. Ultra High Net Worth Individuals (UHNWIs) are purchasing additional homes in cities and countries. 36% of UHNWIs have a second passport and 26% of them are planning to emigrate permanently.
  • Whiskey has become a valuable collectable by HNWIs. Expert Sami Robertson sees single malts taking the place of wine in people’s hearts and pockets. A bottle of The Macallan 1926, with a hand painted bottle, went for £1.2 million in November in 2018.
  • Knight Frank reports that “Sales of Scotch whisky to India, China and Singapore rose by 44%, 35% and 24% respectively in the first half of 2018 according to the Scotch Whisky Association, with single malts totaling almost 30% of total exports.” Some HNWIs purchase their own casks, paying six- or seven figures. Quality Casks are not easily obtained as many distillers hold on to them. Some companies sell limited numbers to an elite few. The Macallan has an invite only program with costs starting at £35K.
  • While whiskey may be on the rise, the luxury housing market is slowing down across the world. Prices are growing slowly or declining. Notably, cities like Manhattan, London, and Vancouver are seeing a decline. This might reverse those markets to become buyer’s markets.
  • Part of the decline may be due to governments wanting to contain wealth and real estate in their countries. Governments are starting to implement new taxes to discourage foreign interests from purchasing real estate. In Vancouver, taxes are higher for non-residents, subject to an empty home tax, and other disincentives. Other countries, like China and India, are implementing capital controls to keep ownership in the country.

What can I do as a result?

How do I identify and connect with HNWIs?

  • Talk to them about their passions. What do they collect? Whiskey might be a new area of high-end collecting but HNWIs may collect other standbys, such as cars, wine, and art.
  • HNWIs are going to be even more mobile than before with additional passports and multiple properties, in spite of government attempts to contain the wealth. While it may be hard to research and find properties in other countries, guided conversation can reveal multi-country property ownership.
  • Pay attention to how your prospects’ talk about their future as well as the country or countries they live in. As wealth restrictions rise, their worldview about wealth and politics may impact their philanthropic giving.

Additional Resources

2017 BNP Paribas Individual Philanthropy Report

Fundraising Insights, Wealth & Philanthropy Intel, , , , ,

By Elizabeth Eck

“Unlike many older philanthropists, this globally connected and tech-savvy cohort is not content with just writing a charitable cheque. They see their skills, networks and for-profit investments as part of how they make an impact with philanthropy.”  -The Economist Intelligence Unit

2017-BNP-PARIBAS-PHILANTHROPY-REPORT_FINAL_Page_01What is this Report?

Based on interviews conducted between November 2016 and January 2017 with affluent millennials and experts, the report assesses the shift in the approach to philanthropy by the next generation of affluent families, focusing on millennials engaged in family foundations. The report explores the millennial mindset, their investment tools and strategies, and the balance struck between family legacy and philanthropic innovation. The report defines millennials as those born between 1980 and 2000.

What are key findings from the article?

  • Millennials are taking the reins. Though the bulk of wealth and charitable giving remains in the hands of older generations at this point, millennials are increasingly being given the reins of family businesses and foundations and becoming the decision-makers.
  • Millennials believe in social entrepreneurship and are thus willing to support or invest in social enterprises and for-profit organizations, sometimes setting up their own. The sectors in which they invest include FinTech, EdTech, food/agriculture, and energy, and they are looking for sustainability – such as job creation and lifting individuals out of poverty. Meanwhile, traditional beneficiaries such as arts institutions are of less interest.
  • Social media has inspired a global perspective. Social media, online news publications, and ease of travel have led millennials to take a more global, dispersed approach to philanthropy. And there’s a sense of urgency to their giving – they want to tackle problems now.
  • Millennials are digitally social. Unlike previous generations, millennials like to use social media to announce the family foundation’s initiatives and achievements and to draw attention to their work. They are also open to collaborative approaches, often using social media to identify strategic partners.
  • Impact investing is interesting. While family foundations often invest endowments in conventional instruments such as stocks and bonds, millennials are increasingly interested in innovative financing tools and impact investing. Impact investments are those made to organizations and funds with the intention of generating social and environmental impact alongside financial return.
  • Millennials are unlikely to abandon traditional grant-making altogether. The report also notes that traditional grant-making and charitable giving is not expected to end as not all issues can be addressed through market-based solutions. Human trafficking and domestic abuse are cited as two examples. Moreover, social entrepreneurs require seed funding in early development.
  • Millennials view legacy more in terms of actions than institutions. As for the balance between family legacy and philanthropic innovation, in general, millennials are less concerned with the formalities of passing a legacy onto the next generation than their elders; however, they are instilling an appreciation for philanthropy in their own children. Rather than family legacy, they think in terms of a legacy of giving where there is less constraint and more incentive to turn ideals into action.

What can I do as a result?

  • Millennials care about being heard and being involved in good causes. Ask millennials for feedback. Even if the older generation is still the decision maker in a family foundation, engage the younger generation as they will be inheriting the reins before long. Ask for their feedback in terms of where they see the foundation going and what issues are important to them. Ask for feedback on how your institution might make improvements. Ask the millennials to volunteer for your organization.
  • Millennials want to tackle causes they care about – now. Learn to utilize all forms of social media – Facebook, Twitter, Instagram, LinkedIn, etc. Establish your presence and contribute meaningful content that tells your story with a sense of urgency.
  • In social media, find and follow foundations tackling the issues in your field. Comment on their posts so they begin to become familiar with your name and organization.
  • Learn to use digital assessment tools to track your impact and then share that information. Again, you want to tell your story and your successes.
  • If you’re in a traditional non-profit organization that doesn’t fall within the realm of social or environmental work, don’t despair. Think in terms of what might appeal to a millennial. Many arts and educational institutions, for example, offer programs for underserved youth. Trumpet the work you’re doing with those populations. You may find the funders following you on social media.

Additional Resources

 

The World’s Uber Wealthy, at a Glance

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“Philanthropic activity is now cited regularly as one of the main interests of the global ultra-wealthy population.”  -World Ultra Wealth Report 2018

What is this Report?

The World’s Uber Wealthy, at a GlanceAuthored by Wealth-X, a provider of global wealth intelligence, this report relies on 2017 data to analyze the ultra high net worth (UHNW) population and its share of global wealth. The report comments on the development of the ultra-wealthy segment and examines political and market drivers, regional trends, and wealth distribution. It further illuminates asset holdings, sources of wealth, and philanthropic interests. Wealth-X defines UNHW individuals as those with a net worth of $30MM or more, who represent 1.1% of the total world population.

What are key findings from the article?

  • The number of ultra-wealthy in 2017 grew by 12.9% to 255,810, with total wealth growing 16.3% to $31.5 trillion. It represents a distinct increase from 3.5% growth in 2016, and low market volatility is primarily credited. North America leads the ultra-wealthy at 35%, followed by Europe at 28% and Asia at 27%. The North American ultra-wealthy population grew by 9.5% to 90,440 individuals in 2017.
  • The United States leads the world’s ultra-wealthy, with a population of 79,595 and total wealth of $9.8 trillion.
  • The top ten UHNW cities are as follows: 1) Hong Kong; 2) New York; 3) Tokyo; 4) Los Angeles; 5) Paris; 6) London; 7) Chicago; 8) San Francisco; 9) Washington, DC; and 10) Osaka.
  • Among UHNW individuals, the fastest growing tier is billionaires, which increased to a record high of 2,754 individuals (1.1% of the UHNW population) and demonstrates a significant increase in extreme wealth creation, particularly in Asia.
  • For UHNW portfolios, liquid assets (primarily cash) accounted for the largest portion at 34.9% of the total, followed by holdings in privately owned companies at 32.2% and stock market listed equities at 26.3%. Holdings in real estate and other luxury assets was 6.6%, or about $8MM per individual.
  • As for the sources of wealth, 67.4% of UHNW individuals are self-made (entrepreneurs), with 21.7% a combination of self-made and inherited wealth, and 10.9% inherited wealth.
  • The proportion of women in the UHNW population has risen gradually with 34,944 individuals representing 13.7% of the global wealth. Traditionally, UHNW women have inherited their wealth; however, the number of self-made entrepreneurs is on the rise, with the U.S. being home to more than half this group.
  • Initiatives such as the Giving Pledge are spurring UHNW individuals to give back, and there is growing popularity of alternative giving vehicles, such as donor-advised funds and impact investing. Among charitable causes, education ranks top, with approximately one third of UHNW individuals donating to such causes. Education is followed by social services, healthcare, arts and cultural causes, children and youth, the environment and animals, and museums and libraries (in descending order).
  • Individuals gifting in excess of $5MM are generally found among the very top tiers of the UHNW wealth pyramid, and they hold substantial levels of liquidity. The U.S. is home to more than 75% of the major donor group, and their average net worth is $484MM. UHNW major donors tend to be an average of 6 years older than the global UHNW population, and a larger share of them have inherited wealth.

What can I do as a result?

How do I identify and connect with UNHW individuals?

  • Keep an eye out for major donors from the top 10 UHNW cities. In the U.S., look for New York City, Los Angeles, Chicago, San Francisco, and Washington, DC.
  • If you find a prospect with at least $8MM in real estate and other luxury items (yachts, airplanes, artwork, cars, etc.), that’s an indicator that you may be dealing with an UHNW individual, one who likely has high liquidity.
  • While you don’t want to ignore potential prospects in Asia, Europe, Latin America, and elsewhere, the vast majority of major gift donors live in the United States, so focus your primary efforts there.
  • Since DAFs are attractive giving vehicles to UHNW individuals, begin to build relationships with wealth advisors. As you cultivate the advisors, they may be more likely to recommend your organization to their clients.
  • UHNW individuals have an affinity for philanthropy, so don’t be afraid to court them. Many feel motivated to give back to society, so do your homework.  Can you find an article in which an individual discusses her philanthropic priorities or perhaps how she rose to such great heights or overcame adversity? Was there a particular organization that facilitated her advancement? Then be creative in your approach. How might your mission align with her priorities?  Remember, these are individuals with great liquidity who may be ripe for cultivation.

Additional Resources

What’s New in the 2018 Capgemini World Wealth Report

Fundraising Insights, Wealth & Philanthropy Intel, , , ,

By Elizabeth Eck

“North America accounts for 31.3% of global HNWI population and 28.2% of wealth. The HNWI population in North America grew by 9.9% in 2017 as compared to 7.8% the previous year, while HNWI financial wealth grew at 10.3% to reach US$19.8 trillion. -Anirban Bose

Capgemini WWR 2018What is this article?

The 2018 World Wealth Report gleans data from more than 2,600 surveys from around the world to report on trends for high net worth individuals (HNWI) and ultra-HNWIs.  The report provides insights into asset allocations and investment preferences, such as working with wealth managers and the growing interest in cryptocurrencies.

Capgemini defines HNWIs as those having investable assets of US$1 million or more, excluding primary residence, collectibles, consumables, and consumer durables.

What are key findings from the article?

  • Global HNWI wealth grew 10.6% to surpass the US$70 trillion mark and remains on course to reach US$100 trillion by 2025, with the Asia-Pacific region leading the way.
  • Asia-Pacific and North America fueled the 2017 growth in HNWI population and wealth, with Asia-Pacific accounting for 42.4% of the rise in HNWI wealth and North America accounting for 27.4%.
  • The US, Japan, Germany, and China are the four largest markets for HNWIs, with the US leading at 5.3 million in 2017, a 10% increase over 2016.  Guidestar estimates the number of active US nonprofits courting these individuals at more than 1.8 million, so there is great competition to secure funding from these individuals.
  • Though asset allocation remained fairly stable, real estate saw a significant increase in HNWI asset allocation in 2017, with an increase of 2.8 percent globally to 16.8%, becoming the third-largest asset class, behind equities and cash.
  • In North America, real estate represents 12.4% of HNWI assets, with residential real estate dominating the class at 52.3% – followed by 16.1% in commercial real estate (excluding hotels), 10.2% in land, 7.0% in farmland, and 5.6% in hotels.
  • HNWIs are becoming interested in investing in cryptocurrencies though the wealth management industry remains cautious because of regulatory uncertainty.
  • Wealth management firms are preparing for the entry of BigTech, which Capgemini defines as data-driven tech firms not traditionally present in financial services such as Amazon, Google/Alphabet, Alibaba, Apple, and Facebook.  Leading wealth management firms are investing in intelligent automation and artificial intelligence to prepare for the greater role that BigTech firms will play.

What can I do as a result?

  • Except in cases of public company insiders, the two biggest asset classes, equities and cash, are not readily transparent to a prospect researcher. Real estate, on the other hand, remains the most often used asset in determining gift capacity because of its transparency in the US. Capgemini estimates US real estate at 12.4% of a HNWI’s total assets, so this number can be very useful for estimating net worth.
  • The US leads the pack in the number of HNWIs – 5.3 million. For those prospecting in the US, there is a vast pool of wealth to tap into.  There is also great competition though, with 1.8 million active nonprofits vying for gifts from those individuals.
  • With the burgeoning interest of HNWIs in cryptocurrency and BigTech, there will be a need for prospect researchers and fundraisers to understand better how wealth management firms will be leveraging these vehicles.

Additional Resources

The Wealth Report | Frank Knight | 2018

Fundraising Insights, Wealth & Philanthropy Intel, , ,

“It is therefore a fairly safe bet that the next decade will not see a repeat of the double or even triple digit property price growth we have seen in leading markets over the past ten years.”

 

What is the Report?

The Wealth Report is a global perspective on prime property and investment published by Knight Frank, a global real estate consultancy firm. The report defines prime property as the most desirable and most expensive property in a given location, generally the top 5% of each market by value. The report emphasizes ultra-wealthy individuals, defined as US$50 million or more in net assets

What Are Key Findings From The Report?

2017 was a banner year for the real estate markets and for the ultra-wealthy. Where are those wealthy individuals and what do they look like?

  • Leading with the most ultra-wealthy individuals, North America takes the top spot with 44,000; Asia overtakes the second spot with 35,880; and Europe narrowly finds itself third with 35,180.
  • Recent changes in U.S. tax law favor a continued upswing in wealth accumulation. Interestingly, while New York tops the list of ultra-wealthy residents now and predicted into the future, London out-performs for where the ultra-wealthy invest in real estate and have preferred lifestyle elements such as quality universities and luxury hotels, shopping, and restaurants.
  • While the majority of the ultra-wealthy have their primary residences in the country from where their wealth is derived, a significant number are globally mobile.
  • Top three reasons for luxury investments: (1) joy of ownership, (2) capital appreciation, and (3) safe haven for capital.
  • Two key trends in 2017 for luxury residential markets were a big slowdown in China’s top-tier cities: Guangzhou, Beijing and Shanghai; and growth in Europe, including Amsterdam, Frankfurt, Paris and Madrid.
  • The top three priciest cities for luxury residential real estate, relative to square meters, were Monaco, Hong Kong, and New York.

What Can I Do As A Result?

  • If the ultra-wealthy are not in your database or on your radar, you still have some takeaways from this report: Owning a second home is a reliable indicator of someone who has wealth. For those that do own multiple properties, consider the top three reasons. Use conversation to help you identify whether the second home purchase is purely out of joy and stretches the purse strings, or if your prospects considers it a good investment, which suggests smart financial planning.
  • New York and London remain the global hotspots for the ultra-wealthy and in the U.S., real estate ownership and sales are public pieces of information. If you have US$1 million gift prospects, consider these addresses as key indicators of wealth worth verifying.
  • While Asia is vying with Europe for the most ultra-wealthy individuals, if your prospects are in China you will want to keep current with government decisions that impact wealth accumulation.

Additional Resources