June 10, 2025 • 24 mins
The more than $100 trillion wealth transfer that’s projected to be passed down from older to younger generations over the next quarter century is set to reshape the wealth management industry. And younger investors plan to move their money to new advisors, according to a report by IT services and consulting group Capgemini.
On this episode of Merryn Talks Money, the firm’s global banking industry leader, Gareth Wilson, joins host Merryn Somerset Webb to discuss why young people want to make the move and what they should consider when choosing new wealth managers.
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News. Welcome to Meren Talks
Your Money, the personal finance edition of Merin Talks Money.
In these bonus podcasts, we talk about the best strategies
(00:23):
for making the most of your money. Now, this episode
is slightly longer than usual. I'm speaking with Gareth Wilton,
who's chief vice president at cap Gemini. They publish annually
a World Wealth Report, which looked at where wealth is
concentrated and where wealth is growing, why it's growing, and
who's getting that money. Gareth, thank you so much for
joining us today. We really appreciate it.
Speaker 2 (00:43):
Great to be a Maren. Thanks for invitation.
Speaker 1 (00:46):
Let's start by talking about this World Wealth Report. It's
super interesting. It's jams all of fascinating findings. But tell
me first, how is it put together?
Speaker 3 (00:54):
The cap Gemini World Wealth Report. This is actually the
twenty ninth edition of this particular industry report that covers
seventy one countries. When we look at the wealth management
industry globally, we interview something like six and a half
thousand high net worth individuals. We also talk to a
number of wealth management executives across captureminised clients and other
(01:15):
industry players as well as some of the kind of
ecosystem by that I mean some of the technology companies
that specifically support wealth management. And then we talk to
some of the relationship managers. And again, relationship managers is
one of the key rules that we talk about in
our World Wealth Report twenty twenty five in terms of
the role they have to play and the opportunity that
(01:36):
is represented to them going forward.
Speaker 1 (01:38):
Okay, so let's start with these six and a half
thousand people, and that's a lot of people to talk to.
How are we defining high net worth ultra high networth?
Who are these people?
Speaker 3 (01:48):
High net worth individual We look at them effectively in
three classifications. So individuals who have investable assets over a
million dollars and the millionaire next door marin that we
all have, we have investible assets between one and five
million dollars. The next category up, which we call mid
(02:09):
tier millionaires, is between five and thirty million, and then
you get into the ultra high net worth individuals with
investible assets of greater than thirty million US dollars. Fundamentally,
if you're above a million dollars, you're included in our
high networth individual discussion.
Speaker 1 (02:28):
And investible assets is liquid cash, so that doesn't include property.
Speaker 3 (02:34):
It doesn't include property, It covers investments that individuals have.
It obviously includes cash. It obviously includes some crypto currency,
which is an increasing consideration.
Speaker 1 (02:45):
Okay, you interviewed six and a half thousand. How many
of these people are there across the board? What percentage
of the population falls into this bit.
Speaker 3 (02:58):
When we look at high network individuals three categorizations, something
like two point six percent of the world's population falls
into this categorization. It does vary by geography. We've seen
how that variation has evolved because, as I say, we've
done this report for multiple years, and when we look
(03:19):
at that two point six percent, six point two fall
into that ultra high net worth. So six point two
percent of the two point six percent have had investible
assets of greater than thirty million dollars.
Speaker 1 (03:32):
Okay, And the richest populations are going to be, presumably
in the US, where it's not going to be two
point six percent, it's going to be very significantly higher.
Speaker 3 (03:41):
It is, and when we look at it, when we
look at the population within North America, seven point three,
so seven point three percent fall into this high net
worth individual we look in Asia, it's something like two
point seven, and we look at Europe it's two point one.
Speaker 1 (03:57):
Can you break that out for the UK at all?
Speaker 3 (04:00):
Not specifically the point I want to make here marinaction,
let me just clarify that those figures in terms of
population are in terms of growth.
Speaker 1 (04:10):
Okay.
Speaker 3 (04:10):
So when we look at North America, there's seven point
three percent growth in terms of the high net worth
individual population. Within Asia Pacific, it's two point seven percent
growth when we compare twenty four to twenty three, and
actually in the UK it's two point one percent decline.
So we've seen a decline in terms of this high
(04:32):
net worth individual population here in the UK for many
of the reasons that you would expect. When we look
at twenty twenty four, it's a year, but North America
is growing apex growing Europe and the UK we've seen
a decline.
Speaker 1 (04:47):
Okay, so I decline in Europe as well.
Speaker 3 (04:49):
Yeah, indeed, I know you said.
Speaker 1 (04:51):
You all know the reasons for this, but would you
run us through them so we can just feel miserable
about them all over again.
Speaker 3 (04:55):
We've seen a fall in terms of the kind of
return on equity investments and fundamentally the stock market that
was obviously contributed. We've seen declines in some of the
investments with regard to private equity, and all of.
Speaker 2 (05:11):
This has contributed to this reduction.
Speaker 1 (05:14):
Okay, interesting, I thought you were going to say that
that number was falling because people were leaving the UK
and the EU and taking their investable assets with them
to go else well, and we've seen a lot of talk,
for example, about the well of leaving the UK for
tax reasons. So I'm surprised that you put it down
to falling returns from their investments, not to actual departures.
Speaker 3 (05:35):
Your point is valid, Marin in terms of the kind
of globalization of this particular segment of the society. They're
definitely looking at opportunities to invest globally. They're certainly looking
at some of the benefits of tax jurisdictions outside.
Speaker 2 (05:53):
Their domestic market.
Speaker 3 (05:54):
In our report this year, we've seen growth in locations
like Singapore. We've seen growth in locations like Hong Kong,
the BI seems to be a well known location for
the relocation of wealth, but also Saudi Arabia.
Speaker 1 (06:10):
We should say, just to be clear, although I think
probably is clear that this is last year's information, and
obviously there's been a big change in the way the
markets have moved so far this.
Speaker 2 (06:19):
Year twenty four versus twenty three. The shift here is
based on the twenty four data.
Speaker 1 (06:23):
Okay, let's talk about the main theme and one of
the big themes of this year's report, which is all
about the great wealth transfer. The number that you put
in there is there'll be a wealth transfer of eighty
three point five trillion dollars to a new generation of
investors or rich people, whatever related called by twenty forty eight.
And that's that's real money.
Speaker 3 (06:43):
Is a huge shift in wealth from one generation to
the next, eighty three point five trillion dollars by twenty
forty eight. Now that twenty forty eight signs a long
way away, Maren. But actually, when you look at the
short term, thirty percent of that wealth will actually transfer
before twenty thirty over the next five years, and a
further sort of thirty percent transition before twenty thirty five.
(07:06):
So it's a big number, but it also is an
imminent consideration for the individuals, obviously, particularly if you're about
to receive or inherit that wealth. But also it's an
important consideration for the wealth management organizations in terms of effectively,
how do they mean relevant to their client's kids generation
(07:28):
in a way that they've being relevant to their to
the parents' generation.
Speaker 1 (07:31):
Yeah, And one of the interesting things about this is
the extent to which that wealth, as it's passed down,
stays in the market and the extent of which it
is removed for living costs, particularly down at the lower end. Right,
do you inherit a million dollars or two million dollars
and you're in your thirties or forties, what are you
going to do? You're probably going to buy a house
and maybe paid for school fees, that kind of thing.
(07:52):
So there is this dynamic where you can't necessarily expect
that eighty three point five trillion to hang around in
stock markets and private equity and crypto exactly. You can
expect it to be taken out for living on dadlie, that.
Speaker 2 (08:07):
Will be the case.
Speaker 3 (08:08):
I think everybody's situation is fundamentally different. However, when we
look at the gen X to those of us who
are between there are forty four and fifty nine years
of age, we have one perception in terms of what
that inheritance will mean. The millennials the famous millennials who
are all sort of between their late twenties and early
(08:30):
forties in twenty twenty five have a different outlook and
to your point, is very relevant, and Maren, that's where property.
Speaker 2 (08:37):
School fees, lifestyle will be.
Speaker 3 (08:39):
And then you have Gen Z's, which are really only
teenagers in their early twenties.
Speaker 2 (08:44):
But there also will be a recipient for this wealth.
Speaker 3 (08:46):
So I think we'll see different behaviors depending on the
generations and obviously by individual, but fundamentally the point we're
making here is how can the wealth management industry take
advantage of this transfer but also mitigate the risk that
it represents because there's a chance that the wealth management
firms will lose some of those assets.
Speaker 1 (09:09):
Let's put the decumulation point aside for the moment. The
secondivetic thing, as you say, is this idea that it's
something of a threat to the wealth management business, partly
in terms of that flow out, but also in terms
of the different expectations and needs that the younger generation
will have. One of the terrifying statistics for wealth management
companies the put in this report is it eighty one
(09:30):
percent of those who inherit a likely to shift wealth
management company within one or two years. Can it really
be that much? Can people really be that non apathetic?
Speaker 3 (09:39):
I think they can, and that statistics definitely support that
potential risk. Now, of course, there's things that we can
all do to mitigate that. You know, do we really
understand what the inheriting generations want to achieve in terms
of their objectives? And as I say, the baby boomers
have somewhat been in a little bit of a wealth
preservation mindset. I think when we look forward into the millennials,
(10:02):
it's all about long term growth and that's where some
of these maybe higher risk assets come into the frame.
We've talked about cryptocurrencies, We've talked about private equity, you know,
a movement towards some of these types of investments in
a portfolio potential consideration. I think this global diversification. I
(10:23):
think future generations will look at the world in its
entirety and think, well, quite franky. If they want to
invest in markets in Asia, they want to invest in
censors like Singapore, then.
Speaker 2 (10:34):
Again much more open to do so.
Speaker 3 (10:37):
And then thirdly, I think that nature of the services.
I think our senses and the report very clearly draws
out that concanerge services, trust planning, property management are willingness
to have a more encompassing relationship that's not just purely
based on the scale of your wealth and the growth
of that particular portfolio, but with a set of cervices
(11:00):
are wrong that really contribute to a lifestyle. Our report
draws out that this idea of luxury, certainly for those
high networth individuals, is becoming an increase in consideration in
terms of where they spend their wealth. How can the
wealth management firms bring some of those lifestyle concierge support
services to bear to make sure that they're bringing that
(11:22):
all encompassing relationship for the future generations.
Speaker 1 (11:25):
Okay, let's go back a bit to this idea of
that young wanting a different class of assets and risk
a class of assets. So crypto okay, private equity. I
mean again, there's a rising evidence that in fact, private
equity is not a higher return asset class at all.
As we say these days, it's not magic, it's debt, right,
(11:48):
And as interest rates rise, and we've seen over the
last couple of years, it's huge difficulty that private equity
companies are having and exiting any of their positions. So
it's possible that private equity may not be one of
the asset classes that the young end up looking at.
But I'm really interested in the idea that they might
want to invest in a more global way, because we
(12:10):
have had over the last couple of decades, even global
has meant the US right in the six seventy percent
of world industries are still America. So even if people
say I want to be globally diversified, they still end
up basically invested in the US and more or less
invested in those top tech companies. But you think that
over the next couple of decades we'll see a shift
(12:32):
driven by people genuinely wanting to be more international.
Speaker 2 (12:36):
Yeah, yeah, we do.
Speaker 3 (12:37):
It's partly driven by some of those favorable tax regimes,
but also the access to those particular sort of financial ecosystems,
the stability political stability within those particular regions are all considerations.
But I think when I look at the long term benefits,
(13:00):
I'm going to bring you back to your point by
private equity, I think when you look at private equity
in the long term, it's a very valid options, as
with crypto, as with the kind of globalization piece.
Speaker 1 (13:09):
Yeah, I have to have to stop you there. I've
got to stop you there because first, on private equity,
there is no real long term because the scale of
it has only relatively recent, right, so we don't know yet.
I'll give you that if you look at the numbers
of the private equity industry, gives you it looks like
maybe this outperforms over the long term. But this is
a tiny industry until relatively recently. It's only become a
(13:30):
giant industry during the low interest rate period. We have
no idea how at this scale it will perform in
a higher interest rate environment. So I'm not giving you
that one Cryptocurrency again, I can't give you that because
there is no long term. We have no idea. There
is no long term. We only have the short term here.
We can only guess about the future, right Which doesn't
(13:51):
mean that if you have a high risk appetite, shouldn't
be in it. But no one can tell you that
cryptocurrency has a great long term performance record because there
is no long term, right Nless, your definition of long
term is different to mine.
Speaker 3 (14:02):
I'm not going to argue with you on that point.
We're seeing organizations invest Goldman Sachs to give an example.
You know, they have their GMFRA product proposition, which is.
Speaker 2 (14:14):
Enabling that b N Y melan. They have what they call.
Speaker 3 (14:17):
All bridge, which is looking at what we talk talk
about alternative investments.
Speaker 2 (14:21):
So as I say, we.
Speaker 3 (14:23):
Can argue the pros and cons, but ultimately I think
as an industry, I think my key point is important
to be cognizant of those those alternative investments and our
sense of capt geminis those will be more relevant going forward,
and I think the regulation of those particular products, you know,
crypto as an example, I suppose they're also increasing let's
(14:48):
just say the acceptance of the opportunity they represent.
Speaker 1 (14:51):
Let's go back to crypto because I get in a
lot of trouble from the bitcoin bros all the time
about confusing bitcoin and crypto because they're different things. Right,
So when you say crypto and you say that the
young or the younger generations would like to include crypto
as an asset class inside their portfolios, what do you mean.
Speaker 3 (15:08):
Anything that qualifies as a digital asset, Maren, including bitcoin?
Speaker 1 (15:12):
Can I just interrupt to give my usal message was
if any of you would like to send hate mail
about the differentiation between crypto or bitcoin, NFTs, etcetera. Please
can you send them direct to Gareth. I'll give you
his contact details at the end.
Speaker 2 (15:23):
Thank you, thank you, My.
Speaker 3 (15:25):
Pleasure, My pleasure.
Speaker 1 (15:26):
Get enough everyone, Everyone should share the.
Speaker 2 (15:28):
Joy exactly exactly.
Speaker 4 (15:31):
I think fifty six percent fifty percent of gen zd's
and millennials view alternative investments as a valid part of
their portfolio.
Speaker 1 (15:44):
Alternative investments, we're putting crypto, we're putting private equity. What
else are we putting.
Speaker 2 (15:49):
ETFs for example? Yeah?
Speaker 3 (15:51):
Yeah, yeah, is that alternative?
Speaker 2 (15:54):
Depends on the product type? Yeah, yeah, all right.
Speaker 3 (15:57):
The other thing about the future generations is the digital
experience very much moving away probably from the classic face
to face. When you look at the millennials, they really
want the mobile interface. They want personalization. So they want
us to use their data. When I say us, the
banking industry, the wealth management industry, they want us to
(16:19):
use their data to bring proactive propositions that are relevant
to their investment strategy. And fundamentally, they probably also want
to see only for these high network of individuals their
extensive wealth in one place.
Speaker 1 (16:33):
Yeah, and I'm really interested in this idea that a
wealth manager should also provide a sort of luxury concierge
service that does travel and does bespoken experiences, education, medical, cybersecurity,
all these things in a wanna that would love. That
sounds great. Do you think that the next generation has
(16:54):
different expectations of how they will spend to the current generation.
And one of the things that we've talked but again
quite a lot on the podcast, is the way, particularly
in travel and people with a much lower level of
wealth than the luxury travel industry previously have expected are
spending very large amounts of money on luxury travel.
Speaker 2 (17:13):
I think it's the experienced generation.
Speaker 3 (17:15):
I think, I think fundamentally and with this this segment,
next generation high networth individuals, it probably just amplifies that Meren.
You know, travel experience, passion. You know, we talk about
passion investments. I can see you look steering.
Speaker 1 (17:33):
It's not physical, it's a snare.
Speaker 3 (17:37):
But you know, art art wine cars. And again in
our cap Gemini report last year, we talked about the
roll of the family offers.
Speaker 2 (17:48):
This is an extension merin in.
Speaker 3 (17:49):
Terms of bringing some of those non financial services to
bear in a way that I see is very much
in line with the client expectations and their desire for experiences.
Speaker 1 (18:01):
Yeah, I guess that what I object to slightly is
idea that something is a passion investment. I kind of
feel either it's a passion or it's an investment confusing too,
and it's a root to low returns or disaster. So listen,
here's the real question for you. Right, we have a
lot of listeners out there. Maybe they're going to inherit,
maybe they're not. Maybe they already have money or whatever,
and they're sitting listening to this and they're thinking themselves,
(18:23):
do you know what, Why haven't I got a wealth manager?
I should have a wealth manager. This is what I need.
And maybe they're inheriting. They're thinking, I don't want my
mum and dad's wealth manager. I never liked them anyway.
Fusty old people, pursuits, ties, blasts, lunch at Christmas. Don't
want any of that nonsense. How do you look for
a wealth manager? What are the main things that you
should be looking for when you go out trying to
(18:43):
find somebody to do exactly this, not just run your money,
but effectively manage your long term, long term income and lifestyle.
What are we looking for?
Speaker 2 (18:52):
Really, really good question. I'll probably think about it in
three ways.
Speaker 3 (18:57):
I think, first and foremost, a wealth manager or wealth
management organization that fundamentally understands your aspirations, so I think
they have to be one hundred percent aligned with what
you want to achieve. I think the second thing I
would say, Marin is I think a wealth manager that
(19:20):
gives you access to the breadth of products, services, and
experiences you're looking for for you and your family. And
then finally, I think with anything in life, there has
to be a degree of chemistry. I think fundamentally having
a very real time relationship that's supported by digital and
we've talked about this demand for a digital platform, but
(19:42):
also that's enabled through a relationship because fundamentally we're talking
about the very important conversations for you as an individual
and your and your future and your family's future.
Speaker 1 (19:55):
Okay, and crucially, what should I pay and how should
I pay? Is there been any shift in the charging
structure for wealth management or are we still just going
to pay one percent advalareum forever one and a half
whatever it is depending on my eiger.
Speaker 3 (20:09):
Obviously it varies very much by organization. Don't comment on
the kind of pricing models for specifics. But again, I
would say, in a world where we're looking to achieve
outcomes and experiences, why not link the investment to those outcomes,
and that will be as a client, that will be
(20:30):
the angle that I would always be looking to take
in terms of how can we get some surety in
terms of the long term investment and how can we
link fees, costs, et cetera on that.
Speaker 1 (20:40):
Basis, So you would suggest that people find a way
to link what they pay to the performance of the
assets that they left for the wealth manager rather than
pay a flat advalorem.
Speaker 3 (20:49):
I think if you're able to make sure that all
aspects of the kind of investment are aligned to the
to the ultimately ams, that would be that for me
would be a preferable model. The relationship manager model as well.
Speaker 2 (21:01):
Maren.
Speaker 3 (21:02):
Let's just think about that, because the other dynamic we're
seeing here is relationship managers are also considering their long
term future. You know, many of them are approaching retirement age.
You know, we've seen a significant proportion of relationship managers
that will leave the industry. So there's quite a lot
of volatility in terms of the relationship manage your community
(21:22):
as well. So again This is another consideration for the
wealth management organizations. How do they retain and grow that
talent that also evolves with their client base.
Speaker 1 (21:33):
How has it happened that the relationship managers in this
business have not recruited at a younger age? Why have
we got an aging industry?
Speaker 3 (21:42):
I think undoubtedly they are, But the key challenge is
can you retain and excite that talent, give them the
capabilities that we've talked about, you know, digital capabilities.
Speaker 2 (21:55):
Generational AI.
Speaker 3 (21:57):
Can you give them access to the products and services
that their clients need?
Speaker 1 (22:01):
You know, we all say it's sorry, Is this really
about a lot of people working in this industry who
used to be active wealth managers and gradually is the
asset management itself is centralized? Men or women or whatever
who used to find themselves actively running assets now find
themselves really only being a relationship manager because the asset
management has been shifted centrally. Is is that what we're
(22:22):
talking about here?
Speaker 3 (22:24):
Undoubtedly there's been a change in the role, but again,
as we've said, there's also a change in the client base,
and there's a wealth management firm. You've got to make
sure that you're giving your relationship managers the tools and
techniques to enable them to serve as future generations.
Speaker 1 (22:40):
Do you know what, Gareth, I think we can now
answer one of the questions that we get asked most
regularly by listeners, which is what career should my child
go into when they leave university? I think you've answered
this for us. Become a specialist wealth management relationship manager
with an AI and luxury travel specialty. I can I
cover it.
Speaker 2 (23:01):
You here to hear first, Merrit, and you hear to
hear first.
Speaker 1 (23:03):
Oh lucky kids, wonderful. Thank you so much, every one.
Last question for you? What are you reading at the moment?
Speaker 3 (23:09):
Oh? I'm reading a book called Vine Street.
Speaker 1 (23:13):
Vine Street.
Speaker 3 (23:13):
Yeah, yeah, there's a drama based in Soho in the
nineteen nineteen thirties, classic police drama. Nothing that's all to
do with banking, nothing that's all to do with financial.
Speaker 1 (23:23):
Services, police drama. I love a police drama. Vine Street. Okay,
Vine Street.
Speaker 3 (23:28):
I recommend it, Marion. I'm very much enjoy it. Part
way three brilliant.
Speaker 1 (23:32):
Thank you so much. Thank you so much for joining
us today.
Speaker 3 (23:34):
That was really really interesting, my pleasure.
Speaker 2 (23:36):
Great to see you.
Speaker 1 (23:37):
Thank you, thanks for listening to this week's Marin Talks Money.
If you like ours, show, rate, review, and subscribe wherever
you listen to podcasts and keep sending questions or comments
The Merror Money at Bloomberg dot net. You can also
follow me and John on Twitter or x. I'm at
marinas w and John is John Underscore Stepe. This episode
was hosted by Meet MAREN'SUMT web. It was produced by
(23:59):
some Asati and Moses and sound designed by Blake Maple's
Special thanks of course to Gareth Wilson.
Bloomberg Audio Studios, Podcasts, radio News. Welcome to Meren Talks
Your Money, the personal finance edition of Merin Talks Money.
In these bonus podcasts, we talk about the best strategies
(00:23):
for making the most of your money. Now, this episode
is slightly longer than usual. I'm speaking with Gareth Wilton,
who's chief vice president at cap Gemini. They publish annually
a World Wealth Report, which looked at where wealth is
concentrated and where wealth is growing, why it's growing, and
who's getting that money. Gareth, thank you so much for
joining us today. We really appreciate it.
Speaker 2 (00:43):
Great to be a Maren. Thanks for invitation.
Speaker 1 (00:46):
Let's start by talking about this World Wealth Report. It's
super interesting. It's jams all of fascinating findings. But tell
me first, how is it put together?
Speaker 3 (00:54):
The cap Gemini World Wealth Report. This is actually the
twenty ninth edition of this particular industry report that covers
seventy one countries. When we look at the wealth management
industry globally, we interview something like six and a half
thousand high net worth individuals. We also talk to a
number of wealth management executives across captureminised clients and other
(01:15):
industry players as well as some of the kind of
ecosystem by that I mean some of the technology companies
that specifically support wealth management. And then we talk to
some of the relationship managers. And again, relationship managers is
one of the key rules that we talk about in
our World Wealth Report twenty twenty five in terms of
the role they have to play and the opportunity that
(01:36):
is represented to them going forward.
Speaker 1 (01:38):
Okay, so let's start with these six and a half
thousand people, and that's a lot of people to talk to.
How are we defining high net worth ultra high networth?
Who are these people?
Speaker 3 (01:48):
High net worth individual We look at them effectively in
three classifications. So individuals who have investable assets over a
million dollars and the millionaire next door marin that we
all have, we have investible assets between one and five
million dollars. The next category up, which we call mid
(02:09):
tier millionaires, is between five and thirty million, and then
you get into the ultra high net worth individuals with
investible assets of greater than thirty million US dollars. Fundamentally,
if you're above a million dollars, you're included in our
high networth individual discussion.
Speaker 1 (02:28):
And investible assets is liquid cash, so that doesn't include property.
Speaker 3 (02:34):
It doesn't include property, It covers investments that individuals have.
It obviously includes cash. It obviously includes some crypto currency,
which is an increasing consideration.
Speaker 1 (02:45):
Okay, you interviewed six and a half thousand. How many
of these people are there across the board? What percentage
of the population falls into this bit.
Speaker 3 (02:58):
When we look at high network individuals three categorizations, something
like two point six percent of the world's population falls
into this categorization. It does vary by geography. We've seen
how that variation has evolved because, as I say, we've
done this report for multiple years, and when we look
(03:19):
at that two point six percent, six point two fall
into that ultra high net worth. So six point two
percent of the two point six percent have had investible
assets of greater than thirty million dollars.
Speaker 1 (03:32):
Okay, And the richest populations are going to be, presumably
in the US, where it's not going to be two
point six percent, it's going to be very significantly higher.
Speaker 3 (03:41):
It is, and when we look at it, when we
look at the population within North America, seven point three,
so seven point three percent fall into this high net
worth individual we look in Asia, it's something like two
point seven, and we look at Europe it's two point one.
Speaker 1 (03:57):
Can you break that out for the UK at all?
Speaker 3 (04:00):
Not specifically the point I want to make here marinaction,
let me just clarify that those figures in terms of
population are in terms of growth.
Speaker 1 (04:10):
Okay.
Speaker 3 (04:10):
So when we look at North America, there's seven point
three percent growth in terms of the high net worth
individual population. Within Asia Pacific, it's two point seven percent
growth when we compare twenty four to twenty three, and
actually in the UK it's two point one percent decline.
So we've seen a decline in terms of this high
(04:32):
net worth individual population here in the UK for many
of the reasons that you would expect. When we look
at twenty twenty four, it's a year, but North America
is growing apex growing Europe and the UK we've seen
a decline.
Speaker 1 (04:47):
Okay, so I decline in Europe as well.
Speaker 3 (04:49):
Yeah, indeed, I know you said.
Speaker 1 (04:51):
You all know the reasons for this, but would you
run us through them so we can just feel miserable
about them all over again.
Speaker 3 (04:55):
We've seen a fall in terms of the kind of
return on equity investments and fundamentally the stock market that
was obviously contributed. We've seen declines in some of the
investments with regard to private equity, and all of.
Speaker 2 (05:11):
This has contributed to this reduction.
Speaker 1 (05:14):
Okay, interesting, I thought you were going to say that
that number was falling because people were leaving the UK
and the EU and taking their investable assets with them
to go else well, and we've seen a lot of talk,
for example, about the well of leaving the UK for
tax reasons. So I'm surprised that you put it down
to falling returns from their investments, not to actual departures.
Speaker 3 (05:35):
Your point is valid, Marin in terms of the kind
of globalization of this particular segment of the society. They're
definitely looking at opportunities to invest globally. They're certainly looking
at some of the benefits of tax jurisdictions outside.
Speaker 2 (05:53):
Their domestic market.
Speaker 3 (05:54):
In our report this year, we've seen growth in locations
like Singapore. We've seen growth in locations like Hong Kong,
the BI seems to be a well known location for
the relocation of wealth, but also Saudi Arabia.
Speaker 1 (06:10):
We should say, just to be clear, although I think
probably is clear that this is last year's information, and
obviously there's been a big change in the way the
markets have moved so far this.
Speaker 2 (06:19):
Year twenty four versus twenty three. The shift here is
based on the twenty four data.
Speaker 1 (06:23):
Okay, let's talk about the main theme and one of
the big themes of this year's report, which is all
about the great wealth transfer. The number that you put
in there is there'll be a wealth transfer of eighty
three point five trillion dollars to a new generation of
investors or rich people, whatever related called by twenty forty eight.
And that's that's real money.
Speaker 3 (06:43):
Is a huge shift in wealth from one generation to
the next, eighty three point five trillion dollars by twenty
forty eight. Now that twenty forty eight signs a long
way away, Maren. But actually, when you look at the
short term, thirty percent of that wealth will actually transfer
before twenty thirty over the next five years, and a
further sort of thirty percent transition before twenty thirty five.
(07:06):
So it's a big number, but it also is an
imminent consideration for the individuals, obviously, particularly if you're about
to receive or inherit that wealth. But also it's an
important consideration for the wealth management organizations in terms of effectively,
how do they mean relevant to their client's kids generation
(07:28):
in a way that they've being relevant to their to
the parents' generation.
Speaker 1 (07:31):
Yeah, And one of the interesting things about this is
the extent to which that wealth, as it's passed down,
stays in the market and the extent of which it
is removed for living costs, particularly down at the lower end. Right,
do you inherit a million dollars or two million dollars
and you're in your thirties or forties, what are you
going to do? You're probably going to buy a house
and maybe paid for school fees, that kind of thing.
(07:52):
So there is this dynamic where you can't necessarily expect
that eighty three point five trillion to hang around in
stock markets and private equity and crypto exactly. You can
expect it to be taken out for living on dadlie, that.
Speaker 2 (08:07):
Will be the case.
Speaker 3 (08:08):
I think everybody's situation is fundamentally different. However, when we
look at the gen X to those of us who
are between there are forty four and fifty nine years
of age, we have one perception in terms of what
that inheritance will mean. The millennials the famous millennials who
are all sort of between their late twenties and early
(08:30):
forties in twenty twenty five have a different outlook and
to your point, is very relevant, and Maren, that's where property.
Speaker 2 (08:37):
School fees, lifestyle will be.
Speaker 3 (08:39):
And then you have Gen Z's, which are really only
teenagers in their early twenties.
Speaker 2 (08:44):
But there also will be a recipient for this wealth.
Speaker 3 (08:46):
So I think we'll see different behaviors depending on the
generations and obviously by individual, but fundamentally the point we're
making here is how can the wealth management industry take
advantage of this transfer but also mitigate the risk that
it represents because there's a chance that the wealth management
firms will lose some of those assets.
Speaker 1 (09:09):
Let's put the decumulation point aside for the moment. The
secondivetic thing, as you say, is this idea that it's
something of a threat to the wealth management business, partly
in terms of that flow out, but also in terms
of the different expectations and needs that the younger generation
will have. One of the terrifying statistics for wealth management
companies the put in this report is it eighty one
(09:30):
percent of those who inherit a likely to shift wealth
management company within one or two years. Can it really
be that much? Can people really be that non apathetic?
Speaker 3 (09:39):
I think they can, and that statistics definitely support that
potential risk. Now, of course, there's things that we can
all do to mitigate that. You know, do we really
understand what the inheriting generations want to achieve in terms
of their objectives? And as I say, the baby boomers
have somewhat been in a little bit of a wealth
preservation mindset. I think when we look forward into the millennials,
(10:02):
it's all about long term growth and that's where some
of these maybe higher risk assets come into the frame.
We've talked about cryptocurrencies, We've talked about private equity, you know,
a movement towards some of these types of investments in
a portfolio potential consideration. I think this global diversification. I
(10:23):
think future generations will look at the world in its
entirety and think, well, quite franky. If they want to
invest in markets in Asia, they want to invest in
censors like Singapore, then.
Speaker 2 (10:34):
Again much more open to do so.
Speaker 3 (10:37):
And then thirdly, I think that nature of the services.
I think our senses and the report very clearly draws
out that concanerge services, trust planning, property management are willingness
to have a more encompassing relationship that's not just purely
based on the scale of your wealth and the growth
of that particular portfolio, but with a set of cervices
(11:00):
are wrong that really contribute to a lifestyle. Our report
draws out that this idea of luxury, certainly for those
high networth individuals, is becoming an increase in consideration in
terms of where they spend their wealth. How can the
wealth management firms bring some of those lifestyle concierge support
services to bear to make sure that they're bringing that
(11:22):
all encompassing relationship for the future generations.
Speaker 1 (11:25):
Okay, let's go back a bit to this idea of
that young wanting a different class of assets and risk
a class of assets. So crypto okay, private equity. I
mean again, there's a rising evidence that in fact, private
equity is not a higher return asset class at all.
As we say these days, it's not magic, it's debt, right,
(11:48):
And as interest rates rise, and we've seen over the
last couple of years, it's huge difficulty that private equity
companies are having and exiting any of their positions. So
it's possible that private equity may not be one of
the asset classes that the young end up looking at.
But I'm really interested in the idea that they might
want to invest in a more global way, because we
(12:10):
have had over the last couple of decades, even global
has meant the US right in the six seventy percent
of world industries are still America. So even if people
say I want to be globally diversified, they still end
up basically invested in the US and more or less
invested in those top tech companies. But you think that
over the next couple of decades we'll see a shift
(12:32):
driven by people genuinely wanting to be more international.
Speaker 2 (12:36):
Yeah, yeah, we do.
Speaker 3 (12:37):
It's partly driven by some of those favorable tax regimes,
but also the access to those particular sort of financial ecosystems,
the stability political stability within those particular regions are all considerations.
But I think when I look at the long term benefits,
(13:00):
I'm going to bring you back to your point by
private equity, I think when you look at private equity
in the long term, it's a very valid options, as
with crypto, as with the kind of globalization piece.
Speaker 1 (13:09):
Yeah, I have to have to stop you there. I've
got to stop you there because first, on private equity,
there is no real long term because the scale of
it has only relatively recent, right, so we don't know yet.
I'll give you that if you look at the numbers
of the private equity industry, gives you it looks like
maybe this outperforms over the long term. But this is
a tiny industry until relatively recently. It's only become a
(13:30):
giant industry during the low interest rate period. We have
no idea how at this scale it will perform in
a higher interest rate environment. So I'm not giving you
that one Cryptocurrency again, I can't give you that because
there is no long term. We have no idea. There
is no long term. We only have the short term here.
We can only guess about the future, right Which doesn't
(13:51):
mean that if you have a high risk appetite, shouldn't
be in it. But no one can tell you that
cryptocurrency has a great long term performance record because there
is no long term, right Nless, your definition of long
term is different to mine.
Speaker 3 (14:02):
I'm not going to argue with you on that point.
We're seeing organizations invest Goldman Sachs to give an example.
You know, they have their GMFRA product proposition, which is.
Speaker 2 (14:14):
Enabling that b N Y melan. They have what they call.
Speaker 3 (14:17):
All bridge, which is looking at what we talk talk
about alternative investments.
Speaker 2 (14:21):
So as I say, we.
Speaker 3 (14:23):
Can argue the pros and cons, but ultimately I think
as an industry, I think my key point is important
to be cognizant of those those alternative investments and our
sense of capt geminis those will be more relevant going forward,
and I think the regulation of those particular products, you know,
crypto as an example, I suppose they're also increasing let's
(14:48):
just say the acceptance of the opportunity they represent.
Speaker 1 (14:51):
Let's go back to crypto because I get in a
lot of trouble from the bitcoin bros all the time
about confusing bitcoin and crypto because they're different things. Right,
So when you say crypto and you say that the
young or the younger generations would like to include crypto
as an asset class inside their portfolios, what do you mean.
Speaker 3 (15:08):
Anything that qualifies as a digital asset, Maren, including bitcoin?
Speaker 1 (15:12):
Can I just interrupt to give my usal message was
if any of you would like to send hate mail
about the differentiation between crypto or bitcoin, NFTs, etcetera. Please
can you send them direct to Gareth. I'll give you
his contact details at the end.
Speaker 2 (15:23):
Thank you, thank you, My.
Speaker 3 (15:25):
Pleasure, My pleasure.
Speaker 1 (15:26):
Get enough everyone, Everyone should share the.
Speaker 2 (15:28):
Joy exactly exactly.
Speaker 4 (15:31):
I think fifty six percent fifty percent of gen zd's
and millennials view alternative investments as a valid part of
their portfolio.
Speaker 1 (15:44):
Alternative investments, we're putting crypto, we're putting private equity. What
else are we putting.
Speaker 2 (15:49):
ETFs for example? Yeah?
Speaker 3 (15:51):
Yeah, yeah, is that alternative?
Speaker 2 (15:54):
Depends on the product type? Yeah, yeah, all right.
Speaker 3 (15:57):
The other thing about the future generations is the digital
experience very much moving away probably from the classic face
to face. When you look at the millennials, they really
want the mobile interface. They want personalization. So they want
us to use their data. When I say us, the
banking industry, the wealth management industry, they want us to
(16:19):
use their data to bring proactive propositions that are relevant
to their investment strategy. And fundamentally, they probably also want
to see only for these high network of individuals their
extensive wealth in one place.
Speaker 1 (16:33):
Yeah, and I'm really interested in this idea that a
wealth manager should also provide a sort of luxury concierge
service that does travel and does bespoken experiences, education, medical, cybersecurity,
all these things in a wanna that would love. That
sounds great. Do you think that the next generation has
(16:54):
different expectations of how they will spend to the current generation.
And one of the things that we've talked but again
quite a lot on the podcast, is the way, particularly
in travel and people with a much lower level of
wealth than the luxury travel industry previously have expected are
spending very large amounts of money on luxury travel.
Speaker 2 (17:13):
I think it's the experienced generation.
Speaker 3 (17:15):
I think, I think fundamentally and with this this segment,
next generation high networth individuals, it probably just amplifies that Meren.
You know, travel experience, passion. You know, we talk about
passion investments. I can see you look steering.
Speaker 1 (17:33):
It's not physical, it's a snare.
Speaker 3 (17:37):
But you know, art art wine cars. And again in
our cap Gemini report last year, we talked about the
roll of the family offers.
Speaker 2 (17:48):
This is an extension merin in.
Speaker 3 (17:49):
Terms of bringing some of those non financial services to
bear in a way that I see is very much
in line with the client expectations and their desire for experiences.
Speaker 1 (18:01):
Yeah, I guess that what I object to slightly is
idea that something is a passion investment. I kind of
feel either it's a passion or it's an investment confusing too,
and it's a root to low returns or disaster. So listen,
here's the real question for you. Right, we have a
lot of listeners out there. Maybe they're going to inherit,
maybe they're not. Maybe they already have money or whatever,
and they're sitting listening to this and they're thinking themselves,
(18:23):
do you know what, Why haven't I got a wealth manager?
I should have a wealth manager. This is what I need.
And maybe they're inheriting. They're thinking, I don't want my
mum and dad's wealth manager. I never liked them anyway.
Fusty old people, pursuits, ties, blasts, lunch at Christmas. Don't
want any of that nonsense. How do you look for
a wealth manager? What are the main things that you
should be looking for when you go out trying to
(18:43):
find somebody to do exactly this, not just run your money,
but effectively manage your long term, long term income and lifestyle.
What are we looking for?
Speaker 2 (18:52):
Really, really good question. I'll probably think about it in
three ways.
Speaker 3 (18:57):
I think, first and foremost, a wealth manager or wealth
management organization that fundamentally understands your aspirations, so I think
they have to be one hundred percent aligned with what
you want to achieve. I think the second thing I
would say, Marin is I think a wealth manager that
(19:20):
gives you access to the breadth of products, services, and
experiences you're looking for for you and your family. And
then finally, I think with anything in life, there has
to be a degree of chemistry. I think fundamentally having
a very real time relationship that's supported by digital and
we've talked about this demand for a digital platform, but
(19:42):
also that's enabled through a relationship because fundamentally we're talking
about the very important conversations for you as an individual
and your and your future and your family's future.
Speaker 1 (19:55):
Okay, and crucially, what should I pay and how should
I pay? Is there been any shift in the charging
structure for wealth management or are we still just going
to pay one percent advalareum forever one and a half
whatever it is depending on my eiger.
Speaker 3 (20:09):
Obviously it varies very much by organization. Don't comment on
the kind of pricing models for specifics. But again, I
would say, in a world where we're looking to achieve
outcomes and experiences, why not link the investment to those outcomes,
and that will be as a client, that will be
(20:30):
the angle that I would always be looking to take
in terms of how can we get some surety in
terms of the long term investment and how can we
link fees, costs, et cetera on that.
Speaker 1 (20:40):
Basis, So you would suggest that people find a way
to link what they pay to the performance of the
assets that they left for the wealth manager rather than
pay a flat advalorem.
Speaker 3 (20:49):
I think if you're able to make sure that all
aspects of the kind of investment are aligned to the
to the ultimately ams, that would be that for me
would be a preferable model. The relationship manager model as well.
Speaker 2 (21:01):
Maren.
Speaker 3 (21:02):
Let's just think about that, because the other dynamic we're
seeing here is relationship managers are also considering their long
term future. You know, many of them are approaching retirement age.
You know, we've seen a significant proportion of relationship managers
that will leave the industry. So there's quite a lot
of volatility in terms of the relationship manage your community
(21:22):
as well. So again This is another consideration for the
wealth management organizations. How do they retain and grow that
talent that also evolves with their client base.
Speaker 1 (21:33):
How has it happened that the relationship managers in this
business have not recruited at a younger age? Why have
we got an aging industry?
Speaker 3 (21:42):
I think undoubtedly they are, But the key challenge is
can you retain and excite that talent, give them the
capabilities that we've talked about, you know, digital capabilities.
Speaker 2 (21:55):
Generational AI.
Speaker 3 (21:57):
Can you give them access to the products and services
that their clients need?
Speaker 1 (22:01):
You know, we all say it's sorry, Is this really
about a lot of people working in this industry who
used to be active wealth managers and gradually is the
asset management itself is centralized? Men or women or whatever
who used to find themselves actively running assets now find
themselves really only being a relationship manager because the asset
management has been shifted centrally. Is is that what we're
(22:22):
talking about here?
Speaker 3 (22:24):
Undoubtedly there's been a change in the role, but again,
as we've said, there's also a change in the client base,
and there's a wealth management firm. You've got to make
sure that you're giving your relationship managers the tools and
techniques to enable them to serve as future generations.
Speaker 1 (22:40):
Do you know what, Gareth, I think we can now
answer one of the questions that we get asked most
regularly by listeners, which is what career should my child
go into when they leave university? I think you've answered
this for us. Become a specialist wealth management relationship manager
with an AI and luxury travel specialty. I can I
cover it.
Speaker 2 (23:01):
You here to hear first, Merrit, and you hear to
hear first.
Speaker 1 (23:03):
Oh lucky kids, wonderful. Thank you so much, every one.
Last question for you? What are you reading at the moment?
Speaker 3 (23:09):
Oh? I'm reading a book called Vine Street.
Speaker 1 (23:13):
Vine Street.
Speaker 3 (23:13):
Yeah, yeah, there's a drama based in Soho in the
nineteen nineteen thirties, classic police drama. Nothing that's all to
do with banking, nothing that's all to do with financial.
Speaker 1 (23:23):
Services, police drama. I love a police drama. Vine Street. Okay,
Vine Street.
Speaker 3 (23:28):
I recommend it, Marion. I'm very much enjoy it. Part
way three brilliant.
Speaker 1 (23:32):
Thank you so much. Thank you so much for joining
us today.
Speaker 3 (23:34):
That was really really interesting, my pleasure.
Speaker 2 (23:36):
Great to see you.
Speaker 1 (23:37):
Thank you, thanks for listening to this week's Marin Talks Money.
If you like ours, show, rate, review, and subscribe wherever
you listen to podcasts and keep sending questions or comments
The Merror Money at Bloomberg dot net. You can also
follow me and John on Twitter or x. I'm at
marinas w and John is John Underscore Stepe. This episode
was hosted by Meet MAREN'SUMT web. It was produced by
(23:59):
some Asati and Moses and sound designed by Blake Maple's
Special thanks of course to Gareth Wilson.
Host
Merryn Somerset Webb
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