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World Wealth Report 2019 by Capgemini

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

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