World's wealthiest are investing in cryptocurrency
Alternative investments gain increasing popularity among the world’s richest people
Many of the world's wealthiest people are investing in cryptocurrency, according to a report by Capgemini.
In its annual World Wealth Report, the management consultancy revealed 72% of global high-net-worth individuals (HNWIs) had invested in cryptocurrencies during 2020.
The report also found that 74% of HNWIs had invested in other digital assets, such as website domain names or apps. Special purpose acquisition companies (SPACs) appeared to be becoming more popular, while non-fungible tokens (NFTs) also gained asset-class credibility.
The global high-net-worth individual (HNWI) population grew by 6.3%, surpassing 20 million in 2020, according to the report.
HNWI wealth rose 7.6%, growing to just under $80 trillion during the year, while North America surpassed Asia-Pacific to become the 2020 leader in both HNWI population and wealth.
The 25th anniversary edition of Capgemini’s World Wealth Report (WWR) also found that the ultra-HNWI segment accounted for a growth in overall HNWI population and wealth of 9.6% and 9.1%, respectively.
Capgemini surveyed 2,900 HNWIs across 26 wealth markets in North America, Latin America, Europe, the Middle East and the Asia-Pacific region for the report.
Sustainable investing also appeared to be maturing during 2020, with 43% of ultra-HNWIs and 39% of younger HNWIs – those under 40 – likely to request an ESG (environmental, social and governance) score for products offered by their firm.
The rise of zero-commission retail investing has also piqued the interest of HNWIs, with 39% saying they desire zero-fee trading, but their wealth management firm is yet to oblige.
Anirban Bose, financial services strategic business unit chief executive and group executive board member at Capgemini, said traditional wealth advisers would need to adapt to meet the needs of HNWIs.
He said: “The wealth management industry must push its frontiers to capture customer mindshare and best serve HNW clients accustomed to BigTech convenience and personalisation.”
Capgemini also said: “As tech players continue to enter the wealth management space, wealth management firms need to move toward technology-enabled advice and hyper-personalised business models.”
In addition, as COVID-19 brought the third global economic upheaval of the 21st century, “lessons from the 2002 tech bubble and 2008 global financial crisis continue to point to the tendency of HNWIs to self-direct investments in a bullish market but return to advice-seeking during crisis and market volatility.
“To meet evolving HNWI expectations, firms will also need BigTech strategies with hyper-personalisation, lifestyle ecosystem offerings and intuitive embedded interfaces to retain relevance among a diverse client base.”
Capgemini's World Wealth Report 2021 covered 71 markets, accounting for more than 98% of global gross national income and 99% of world stock market capitalisation.