June 10, 2026 • 25 mins
Who became wealthier in 2025 and what do they want from their financial advisor? Merryn Somerset Webb sits down with Capgemini's Gareth Wilson to discuss the latest World Wealth Report, the rise of robo-advisors and family offices and why traditional wealth management firms are facing growing competition. They also debate the question: Do investors want empathy from their wealth manager or simply better returns?
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2 (00:16):
Welcome to Marin Talks to Your Money, the personal finance
edition of Merin Talks Money. In these bonus podcasts, we
talk about the best strategies for making the most of
your money. I'm Merinsum, Supweb Editor at Last for Bloomberg
UK Money. So this week we are talking about who
is getting wealthier and where and how those people are
(00:36):
reshaping the wealth management industry. What do they want from
their management teams that they didn't want a decade ago?
To talk about it, we've provided on Gareth Wilson, global
banking industry leader and executive vice president of IT services
and consulting group cap Gemini. Cap Gemini recently released its
thirty years edition of the Institute's World Wealth Report. We
(00:56):
talk about the growing appealab alternative as it's the folks
on diversify portfolios. Stick around to hear more about this
and about whether what you want from your wealth manager
is excellent returns or empathy. Garrett, thanks for joining us today.
Speaker 1 (01:11):
Thank you, Maren. Great to be on Marin Talks Money.
Speaker 2 (01:14):
Right now, we are talking about rich people and very
rich people. So before we start, because what we're going
to do in this podcast, are going to talk a
lot about high network people and ultra high network people.
So can we just start by defining what we're talking about.
Who is a high network person? What do you need
to have to be referenced in this report?
Speaker 1 (01:32):
So, high net worth individual is an individual who has
investible assets that's greater than a million dollars maren.
Speaker 2 (01:41):
Okay, and investable assets is everything's of your house.
Speaker 1 (01:44):
Everything except your house, everything except your house. And if
you've got if you've got investible assets between one and
five million, uh huh, we refer to you as a millionaire.
Next door, if you've got assets between five and thirty,
we talk about you as a mid tier millionaire. And
then for the bracket of individuals who have assets and
vestable assets of greater than thirty million dollars, high networth individuals.
Speaker 2 (02:08):
Okay, hang on, I've got to have a lot to
be a high networth individual, you do?
Speaker 1 (02:12):
And ultra high networth individual.
Speaker 2 (02:14):
Soul, everybody here is a high net worth individual and HNW,
but only those above what was it, thirty thirty, ultra thirty,
ultra high networth, well thirty is not going to get
you much. These days is it by the time you've
got a holiday home and a boat and all that.
Speaker 1 (02:31):
And that's the interesting thing that we're seeing, Meren, the
growth in terms of that population. So when you look
at that full high networth individual population, yeah, I think
we're talking about twenty five million people globally. Yeah, and
we've added when we look at the year twenty four
versus twenty five, we've added two million additional high networth individuals.
(02:54):
So the population is growing, but their absolute wealth is
growing as well, Meren. And it's growing at the fastest
level when we compare twenty twenty four to twenty twenty
five for the last five years.
Speaker 2 (03:06):
Interesting, have you got any analysis of the bit above that,
like anyone over two hundred or how many billionaires, etc.
Or a week stopping at thirty for the pepastes of
this real world.
Speaker 1 (03:16):
Well, we've captured that ultra high net worth individual segment,
if I could describe it that way, Maren, as above
thirty million, So we haven't looked at bands within that. However,
when we look at that group as well, it's something
like one percent of those total high net worth population,
and they own something like thirty five percent of that
(03:37):
tall wealth. So there's a real concentration at the top
of the pyramids. So one percent represents thirty five percent,
So there's really individuals there that meet your definition at
two three, four hundred million plus.
Speaker 2 (03:51):
Yeah, the bit where you really can have anything you want.
Speaker 1 (03:54):
Exactly. Yeah, indeed.
Speaker 2 (03:55):
Okay, So where is wealth growing the most? I think
we probably all would get that. It's the US, which
is where we're seeing the highest number of people entering
the high net worth equation and growing the fastest.
Speaker 1 (04:08):
Yeah, exactly. Again, based on our cap Gemini analysis in
our World Wealth Report, when we compare twenty twenty four
to twenty twenty five, something like ten percent growth in
terms of that high net worth individuals in the US,
and that was growing the fastest globally. Asia Pacific was
also pretty positive on that basis. And then when you
(04:31):
looked at Europe and the UK still growing merin but
and less less positively.
Speaker 3 (04:37):
Yeah.
Speaker 1 (04:38):
And then probably the Middle East was one example when
we compared twenty four to twenty five where actually we
saw a decrease in terms of some of that both
population and wealth, but the US leading the way, followed
by Asia Pacific.
Speaker 2 (04:51):
Okay, And if you look at Asia Pacific. We'll come
back to the miseries of Europe shortly, but a lot
of that presumably was based around the extraordinary rise in
these create a stock market it.
Speaker 1 (05:01):
Was, yeah, indeed, Yeah, we're seeing positive, positive trajectory on
that basis. And interestingly, to your point there, and for
these high networth individuals, we also saw equities become more
important in their portfolio. The stock market increases that we
saw were certainly driving a proportion of that that wealth
population and wealth growth.
Speaker 2 (05:22):
So when you look at who's growing wealthier ware across
the world, you can pretty much see the correlation with
domestic stock markets. It's interesting because it suggests that most
places have a fairly hefty.
Speaker 3 (05:32):
Home buy it.
Speaker 1 (05:34):
Yes, yeah, very much so. And we saw a little
bit of a movement away from some of the more
conservative asset classes. So where we saw equities increase by
something like three percent, we saw cash reduce by two percent,
So some of that.
Speaker 2 (05:50):
Kind of Yeah, I'm always interested by when I look
at your chats every year, I'm always interested by the
extent of which the high network people keep so much
money and can your cash equivalents. It always knocks around
pretty substantially over twenty percent twenty three, twenty four to
twenty five percent, and that seems an awful lot of
your assets to hold in cash, your cash equivalents. I'm
pretty sure that if you looked at mid ranking wealthy
(06:12):
people before they quite get you your millionaire next door,
they'd be holding much less of that in cash your
cash equivalents.
Speaker 1 (06:18):
Yeah, I think, I think, I think you're right, and
I think it's we always use it as a little
bit of a barometer in terms of risk appetite, conservatism,
and in markets that are growing, were individuals the greater
value in terms of stop and equity markets, they're obviously
taking on a greater risk position. Fixed income we also
(06:41):
saw increase when we looked at twenty four versus twenty
five Merrin so again by something like two percent these points.
And interestingly, alternative investments we saw a little bit of
a decline, So there was a move away from some
of the alts into fixed income and equities. But I
think you point. I think those higher worth individuals were
(07:03):
really following where they saw the performance and the value
in twenty twenty five.
Speaker 2 (07:10):
And when you say alternatives, what do you mean you're
talking about private equity and the main private equity, private credit, etc.
Speaker 1 (07:15):
Private equity, private credit, some of the hedge hedge funds. Yeah,
and again not all of those investment asset classes are
available to everyone. You know, and I know you've discussed
this in the past in terms of both the liquidity
associated with private assets but also in terms of accessibility.
But again, I think that breadth of asset class and
(07:37):
those breadth of investments is something we're seeing greater appetite for.
Speaker 2 (07:42):
I was interested to see that two thirds of your
respondents said that they were interested in increasing their exposure
to private equity, which seems to me so slightly extraordinary
at the moment when it hasn't been a great performer,
and there's an awful lot of debate about the extent
to which it's historical record about performance is real or not.
But still everyone says they want more.
Speaker 1 (08:00):
I think they want more access to it, Marin. That's
not necessarily going to say they're going to commit, but
having the option, and I think this for high net
worth individuals, access to products and services is a real
driver and the ability to the ability to diversify your portfolio,
whether it be in terms of asset classes, are also
(08:23):
geographically Again, I think you and I have touched on
this in the past. We've seen high net worth individuals
want to diversify into different markets. We've seen significant growth
and attraction in Asia and the Middle East in the past.
So I think to your point about two thirds of
our respondents wanting to have access to the alternative investments,
(08:44):
I think that's true. Whether or not they'll commit is
dependent on that point in terms of where they see
value and where they see growth and.
Speaker 2 (08:52):
What about crypto, And one of the things that you
talk about in the report is how important it is
for wealth managers to be able to offer their high
networth investors' access to all investment classes and crypto. Again,
is that a class that I'm loath to call it
an asset class to be honest, But is that a
group of possible places where you might put some money
about that investors are more interested in?
Speaker 1 (09:12):
Now more interested is a subjective statement, but again I
would put it in the same class as alternative investments.
If you're wealth manager can give you access to digital assets,
to crypto, and they can do it through a platform
that's easily accessible, then I think that is kind of
meeting these high net worth individuals their expectations and giving
(09:36):
them the option to choose that within their portfolio, whether
or not they take that decision, I think, as I say,
it's a different point.
Speaker 2 (09:42):
It's a different matter.
Speaker 3 (09:44):
Yeah.
Speaker 2 (09:59):
One of the things you're saying this new report is
that we are, at your words, clear inflection point for
the wealth management industry. What does that mean and why now?
Speaker 1 (10:09):
I think the inflection point I think that's probably founded
on three perspectives here, Maren. I think the first point,
I would say is just growing this growing wealth. And
I think we've seen this trajectory over thirty years. Actually
we've been writing this report for thirty years, which yeah,
makes us all feel a little bit dated, but.
Speaker 2 (10:26):
The way dated, but expert dated, but.
Speaker 1 (10:28):
Expert and d experienced. But I think the wealth management
industry obviously continues to grow to service this growing population
and say it grew by seven point eight percent globally
in twenty twenty five. But also the expectations of those individuals.
And we started this conversation by defining high net worth individuals.
(10:50):
The expectation is that we can bring very personal, a
very personal relationship, a very personal experience, and we can
also bring the breadth of products and services that those
individuals require. So I think there's a real kind of
call to action for the wealth managers to move away
from some of this kind of standard wealth band segmentation
(11:12):
to bring very kind of personalized products and services.
Speaker 2 (11:16):
Why because most people, as far as I see it,
most people, until you get up into your thirty, forty,
whatever million dollar band, most people require the same things
from their wealth manager. They don't mind some talking in
your report about the importance of empathy led advice. And
I can't think of anything worse than my wealth manager
giving me empathy led advice. What I'd like him to
(11:38):
do is to make me absolute returns in excessive inflation
every single year without making a fuss about it. And
that seems to me that is what everybody wants from
their wealth manager. Not endless communication and empathy and complicated portfolios.
What am I missing?
Speaker 1 (11:54):
We might have to agree to disagree here, Marion, because
I do think that model where success is purely bag
some performance and it's purely denominated by your annual portfolio review,
is not the expectation in terms of the pace with
which the markets in the world is moving. And I
think high net worth individuals want to have the ability
(12:17):
to be able to optimize products and services on a
very kind of timely and a very real time basis.
Speaker 2 (12:24):
What does that What does that mean? Gareth? What does
that mean? Optimize products and services on a real time basis?
Surely you employ a wealth manager to manage your money
without constant reference to you, because it's a delegated activity.
But the way you seem to be looking at is
though it is a non delegated activity, but more of
a regular conversation in that when previously when we've talked
(12:48):
to we've talked about wealth management on the podcast. What
we do is we say to people, look, if you
don't want to manage your own money, get some guy
to go do it for you. Then you can sleep
at night and you don't have to think about it.
So is the suggest here that high networth individuals are
changing from that idea of I give my money to
this guy or woman and they're going to take care
of it and I don't have to do anything. I
(13:09):
can sleep at night because I know this guy's a
pro and he's got it under control. What you're talking
about seems to be a regular communication that involves empathy.
Speaker 1 (13:19):
There's definitely the need for more of a kind of
proactive and regular management of your portfolio. Now, I suppose
the point I'm making here is if you want to
delegate that and leave that on a twelve month schedule,
then that's obviously one requirement. However, I think there are
(13:39):
individuals who want to have opportunities to present it to
them in a very kind of immediate fashion. So as
things are changing, whether that be changes in the market,
changes in the geopolitical situation, changes in terms of their
kind of personal situation, meren, they're looking for their wealth
managers to be pro and to predict what's required based
(14:03):
on their requirements and objectives and intervene on that basis.
So I think we are seeing a demand for a
much more active relationship rather than a periodic relationship. And also,
I think this idea that we're operating in a very
kind of real time environment. You and I have become
very comfortable with the immediate experience, the real time experience
(14:26):
of being able to order an Amazon being delivered within
X number of ours if required. Again, I think in
a wealth management context, marin clients want to have that
level of insight they want their wealth managers to understand
their expectations and their objectives and to respond on that basis.
(14:47):
And the other thing I would say from our analysis, Maren,
we've seen if you're able to provide the level of
personalization that we're talking about here, those individuals will recommend
and you to their peers and to their friends, even.
Speaker 2 (15:04):
If you're charging more than the robo advisor down the road.
Speaker 1 (15:07):
And the other time now that we're saying is individuals
are having multiple relationships with their wealth managers. Five years ago,
six years ago, in twenty nineteen, something like thirty nine
percent of all individuals had a relationship with one wealth
management organization. When we look at that figure nine in
(15:28):
twenty twenty five, that's reduced to nineteen percent. So my
point is, Maren, individuals are looking towards multiple organizations to
provide access to the products and services they need.
Speaker 2 (15:41):
That is one of the numbers that jumped out as
me as well. And I think you may look at
that and say, maybe they're not satisfied with one and
so they're moving to another. But that doesn't Necesslily argue
against the idea that you want a personalized, empathetic wealth manager,
because if you have four different wealth managers, they definitely
do not have oversight of your full portfolio or of
(16:02):
your full lifestyle because you've got three other guys as
well who are doing something else. If you want that personalized,
empathetic one on one understand my family, understand my generational shifts,
understand my wealth, understand how I feel, etc.
Speaker 1 (16:18):
Etc.
Speaker 2 (16:19):
You'd want one wealth manager. This is like having four therapists.
Speaker 1 (16:22):
The kind of argument to that, I would say is
that if you can provide the full breadth of products
and services that's required under a single umbrella, under a
single umbrella, then I think you can maximize the strength
and quite frankly, the stickiness of that relationship.
Speaker 2 (16:39):
Okay, shift, this shift represents the failure of the industry.
Speaker 1 (16:44):
I think this shift represents that demand from clients for
a greater personalized relationship with empathy and also a greater
access to products and services because no one firm has
been providing that. And we've also seen merin to your point.
We've seen the advent of the robo advisors. We've seen
(17:07):
growth in that kind of digital only model. We at
the other end of the scale, we've seen growth in
terms of the family offices. So again, if you look
at the traditional wealth management organizations, there's competition from family offices.
There's competitions from the kind of robo advisors and in
the model where they're not able to deliver the experience
(17:30):
or the products and services that's required. That's meaning assets
are flowing away from the traditional wealth management firms to
the competition. And again in our report we quantify that
as something like one point five trillion of new assets
that have moved into that competitive sphere. So there's an opportunity,
(17:51):
but obviously there's clearly a threat as well.
Speaker 2 (17:52):
Yeah, and you're focusing the highest growth rates for the
robo advisors over their traditional the family offices, which makes
sense because the lower base, etc. But that is where
you're expecting to see the growth.
Speaker 1 (18:02):
It is. But again you've got to look at this
at an individual basis, because again when we look at
those ultrahi networth individuals with investable assets of greater than
thirty million, the rule of the family offers not just
the financial services that they're bringing marin, but some of
those non financial services around estate planning, inheritance likewise becomes
(18:24):
increasingly important. When we look at products and services. Of course,
we can talk about asset types, we can talk about crypto,
we can talk about alternatives. But I also think there's
a rule for the wealth management firms here to bring
those broader services to bear again in a way that's
directly relevant to their clients.
Speaker 2 (18:41):
Yeah, okay, so most marintalks money listeners I think are
probably at the top end of your millionaire next door,
maybe the bottom end of your million next door, or
maybe soon they'll be your millionaire next door. What should
they be looking for in a wealth manager?
Speaker 1 (18:55):
First and foremost, I think they should be looking for
performance manager that gives them the return that they aspire
towards in terms of their objectives. I also think they
should be looking for a wealth management firm that gives
them access to the products and services which they believe
will be relevant for them and their family going forward. Yeah,
(19:18):
and then the final thing I would say is a
wealth manager where they don't have to repeat themselves. Part
of our analysis suggested that individuals forty two percent of
the individuals in the high network that we interviewed have
to restate their objectives and requirements. Can you have a
relationship with an organization? He Here's your requirements once understands
(19:39):
them and actively manages those going forward, this idea of
personalization but also access to products and services.
Speaker 2 (19:47):
Yeah, I guess that robo advisory you do only have
to tell.
Speaker 1 (19:50):
Once indeed, and also a robo advisor can take advantage
of some of the artificial intelligence data and information and
that's increasingly available to optimize that relationship.
Speaker 2 (20:03):
Maron, Well, I suppose that is one of the questions
ever thinking about how do you find a wealth manager?
What are you looking for in a wealth manager? The
questions you're going to ask are taught me through your
performance and show me how that works relative to the
performance from other wealth managers, which I know is information
that is not always easy to get hold of. And
then what products and services are you providing? Can you
show me the whole suite and outside actual products? Do
(20:25):
you have a tax advice et cetera, et cetera legal
environment department? And then maybe this last question is can
you explain to me how you are using AI to
enhance your productivity?
Speaker 1 (20:36):
Yeah, well, you know, I think a lot of that
is focused on that role of the relationship manager, which
is still very key role across the industry. And again
when we looked at when we looked at the relationship
managers that we met and we talked to, I think
we talked to something like thirteen hundred of them as
part of our report. Maren still about forty percent of
the activity they do they consider as operational administration. Can't
(21:02):
you use AI to somewhat automate that and then ensure
that the relationship managers are spending their time bruly invested
in their clients and their clients wealth and their clients'
portfolios using artificial intelligence around things like know your customer,
some of the tools and techniques around managing meetings, and
(21:22):
some of the kind of communication on that basis, and
portfolio optimization. We still believe the relationship manager is key,
and even in the world of AI Maren, we still
believe there's a role for the human element, the human
judgment within the wealth management industry and that that relationship.
Using AI to support the relationship manager, but also using
(21:44):
AI to understand more about you as a client. Okay,
what do we know about Maren and the things that
she's doing Beyond.
Speaker 2 (21:51):
Maren wants to make two or three percentage points above
inflation every year and not be bothered. That's what Maren wants,
and I still think that's what most people.
Speaker 1 (21:59):
Well, you know, I think what we're talking about here
will hopefully not only meet your expectations, Maren, but exceed them.
Speaker 2 (22:05):
Okay, excellent. Can I ask you one last question before
we've finished, which is about family offices. We're seeing the
rise and rise of the family office. How much money
do you need for that. I'm not talking about a
single family offices. I'm sure some of my listeners are
rich enough for a single family office, but a multiple
family office or to get the kind of service you
might get from a family office type organization. Which bit
of high network do you need to slot into for
(22:27):
that and where do you start?
Speaker 1 (22:28):
I think, unfortunately, Maren, it's not the millionaire's next door.
Unfortunately is not the millionaire's next door. So I think
in that bracket, when you're getting north of five into
the kind of thirty million region, that's where that's when
you and your family will be will be relevant on
that basis, But again I would come back to understanding
(22:49):
truly what you want to achieve. I think we've seen
with the advent of entrepreneurs there's a lot of wealth
that's being generated through entrepreneurs and the transactions that they're
successfully executing within their respective ventures and businesses. And again,
as significant amount of wealth generated quite quickly, also lends
(23:11):
itself to that kind of family office scenario.
Speaker 2 (23:14):
Yeah, there'll be a lot of excitement around in the
wealth management community about the mega IPOs, right.
Speaker 1 (23:18):
Of course. Of course, we've got anthropic on the it
was on the books on SpaceX when we looked at
what was generating wealth previously, we talked about those equity markets,
we talked about stocks and shares, and I think it
continues to be a significant part of the growth that
we've seen over the last five years.
Speaker 2 (23:34):
Yeah, and it will be I'll tell you what, when
we next have this conversation, we tend to have it
in a reat. When we next have this conversation, we'll
know a lot more about how the young, newly rich
young like to have their money managed and what kind
of health managers there after, because assuming something doesn't get
horribly wrong, which of course it could, there will be
an awful lot of newly rich, relatively young people presumably
(23:54):
delegating a lot of that money management to the wealth
management industry. So we'll know a lot more in a year, won't.
Speaker 1 (24:00):
We We will, and I suppose my prediction is they
will definitely want that level of empathy and personalization that
we've talked about, Maren. But also I think they'll be
demanding in terms of the kind of products and services
from the wealth management industry and their relationship managers.
Speaker 2 (24:16):
Yeah, it's fascinating and we will find out. Gareth. Thank
you so much joining us today.
Speaker 1 (24:20):
Pleasure Maren.
Speaker 2 (24:31):
Thanks for listening to this week's Maren Talk to Your Money.
If you like our show, rate review and subscribe wherever
you listen to your podcast. Also be shorts, follow me
and John on x or Twitter. I am Meren s
W and John is John Underscore Steppek. This episode was
produced by Samasadi and Moses and sound designed by Blake
Maples Bestial. Thanks of course to Gareth Wilson and the
(24:52):
team at cap Gemini and questions and comments on this
show are always welcome. Our show email is Meren Money
at Bloomberg dotnut
Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2 (00:16):
Welcome to Marin Talks to Your Money, the personal finance
edition of Merin Talks Money. In these bonus podcasts, we
talk about the best strategies for making the most of
your money. I'm Merinsum, Supweb Editor at Last for Bloomberg
UK Money. So this week we are talking about who
is getting wealthier and where and how those people are
(00:36):
reshaping the wealth management industry. What do they want from
their management teams that they didn't want a decade ago?
To talk about it, we've provided on Gareth Wilson, global
banking industry leader and executive vice president of IT services
and consulting group cap Gemini. Cap Gemini recently released its
thirty years edition of the Institute's World Wealth Report. We
(00:56):
talk about the growing appealab alternative as it's the folks
on diversify portfolios. Stick around to hear more about this
and about whether what you want from your wealth manager
is excellent returns or empathy. Garrett, thanks for joining us today.
Speaker 1 (01:11):
Thank you, Maren. Great to be on Marin Talks Money.
Speaker 2 (01:14):
Right now, we are talking about rich people and very
rich people. So before we start, because what we're going
to do in this podcast, are going to talk a
lot about high network people and ultra high network people.
So can we just start by defining what we're talking about.
Who is a high network person? What do you need
to have to be referenced in this report?
Speaker 1 (01:32):
So, high net worth individual is an individual who has
investible assets that's greater than a million dollars maren.
Speaker 2 (01:41):
Okay, and investable assets is everything's of your house.
Speaker 1 (01:44):
Everything except your house, everything except your house. And if
you've got if you've got investible assets between one and
five million, uh huh, we refer to you as a millionaire.
Next door, if you've got assets between five and thirty,
we talk about you as a mid tier millionaire. And
then for the bracket of individuals who have assets and
vestable assets of greater than thirty million dollars, high networth individuals.
Speaker 2 (02:08):
Okay, hang on, I've got to have a lot to
be a high networth individual, you do?
Speaker 1 (02:12):
And ultra high networth individual.
Speaker 2 (02:14):
Soul, everybody here is a high net worth individual and HNW,
but only those above what was it, thirty thirty, ultra thirty,
ultra high networth, well thirty is not going to get
you much. These days is it by the time you've
got a holiday home and a boat and all that.
Speaker 1 (02:31):
And that's the interesting thing that we're seeing, Meren, the
growth in terms of that population. So when you look
at that full high networth individual population, yeah, I think
we're talking about twenty five million people globally. Yeah, and
we've added when we look at the year twenty four
versus twenty five, we've added two million additional high networth individuals.
(02:54):
So the population is growing, but their absolute wealth is
growing as well, Meren. And it's growing at the fastest
level when we compare twenty twenty four to twenty twenty
five for the last five years.
Speaker 2 (03:06):
Interesting, have you got any analysis of the bit above that,
like anyone over two hundred or how many billionaires, etc.
Or a week stopping at thirty for the pepastes of
this real world.
Speaker 1 (03:16):
Well, we've captured that ultra high net worth individual segment,
if I could describe it that way, Maren, as above
thirty million, So we haven't looked at bands within that. However,
when we look at that group as well, it's something
like one percent of those total high net worth population,
and they own something like thirty five percent of that
(03:37):
tall wealth. So there's a real concentration at the top
of the pyramids. So one percent represents thirty five percent,
So there's really individuals there that meet your definition at
two three, four hundred million plus.
Speaker 2 (03:51):
Yeah, the bit where you really can have anything you want.
Speaker 1 (03:54):
Exactly. Yeah, indeed.
Speaker 2 (03:55):
Okay, So where is wealth growing the most? I think
we probably all would get that. It's the US, which
is where we're seeing the highest number of people entering
the high net worth equation and growing the fastest.
Speaker 1 (04:08):
Yeah, exactly. Again, based on our cap Gemini analysis in
our World Wealth Report, when we compare twenty twenty four
to twenty twenty five, something like ten percent growth in
terms of that high net worth individuals in the US,
and that was growing the fastest globally. Asia Pacific was
also pretty positive on that basis. And then when you
(04:31):
looked at Europe and the UK still growing merin but
and less less positively.
Speaker 3 (04:37):
Yeah.
Speaker 1 (04:38):
And then probably the Middle East was one example when
we compared twenty four to twenty five where actually we
saw a decrease in terms of some of that both
population and wealth, but the US leading the way, followed
by Asia Pacific.
Speaker 2 (04:51):
Okay, And if you look at Asia Pacific. We'll come
back to the miseries of Europe shortly, but a lot
of that presumably was based around the extraordinary rise in
these create a stock market it.
Speaker 1 (05:01):
Was, yeah, indeed, Yeah, we're seeing positive, positive trajectory on
that basis. And interestingly, to your point there, and for
these high networth individuals, we also saw equities become more
important in their portfolio. The stock market increases that we
saw were certainly driving a proportion of that that wealth
population and wealth growth.
Speaker 2 (05:22):
So when you look at who's growing wealthier ware across
the world, you can pretty much see the correlation with
domestic stock markets. It's interesting because it suggests that most
places have a fairly hefty.
Speaker 3 (05:32):
Home buy it.
Speaker 1 (05:34):
Yes, yeah, very much so. And we saw a little
bit of a movement away from some of the more
conservative asset classes. So where we saw equities increase by
something like three percent, we saw cash reduce by two percent,
So some of that.
Speaker 2 (05:50):
Kind of Yeah, I'm always interested by when I look
at your chats every year, I'm always interested by the
extent of which the high network people keep so much
money and can your cash equivalents. It always knocks around
pretty substantially over twenty percent twenty three, twenty four to
twenty five percent, and that seems an awful lot of
your assets to hold in cash, your cash equivalents. I'm
pretty sure that if you looked at mid ranking wealthy
(06:12):
people before they quite get you your millionaire next door,
they'd be holding much less of that in cash your
cash equivalents.
Speaker 1 (06:18):
Yeah, I think, I think, I think you're right, and
I think it's we always use it as a little
bit of a barometer in terms of risk appetite, conservatism,
and in markets that are growing, were individuals the greater
value in terms of stop and equity markets, they're obviously
taking on a greater risk position. Fixed income we also
(06:41):
saw increase when we looked at twenty four versus twenty
five Merrin so again by something like two percent these points.
And interestingly, alternative investments we saw a little bit of
a decline, So there was a move away from some
of the alts into fixed income and equities. But I
think you point. I think those higher worth individuals were
(07:03):
really following where they saw the performance and the value
in twenty twenty five.
Speaker 2 (07:10):
And when you say alternatives, what do you mean you're
talking about private equity and the main private equity, private credit, etc.
Speaker 1 (07:15):
Private equity, private credit, some of the hedge hedge funds. Yeah,
and again not all of those investment asset classes are
available to everyone. You know, and I know you've discussed
this in the past in terms of both the liquidity
associated with private assets but also in terms of accessibility.
But again, I think that breadth of asset class and
(07:37):
those breadth of investments is something we're seeing greater appetite for.
Speaker 2 (07:42):
I was interested to see that two thirds of your
respondents said that they were interested in increasing their exposure
to private equity, which seems to me so slightly extraordinary
at the moment when it hasn't been a great performer,
and there's an awful lot of debate about the extent
to which it's historical record about performance is real or not.
But still everyone says they want more.
Speaker 1 (08:00):
I think they want more access to it, Marin. That's
not necessarily going to say they're going to commit, but
having the option, and I think this for high net
worth individuals, access to products and services is a real
driver and the ability to the ability to diversify your portfolio,
whether it be in terms of asset classes, are also
(08:23):
geographically Again, I think you and I have touched on
this in the past. We've seen high net worth individuals
want to diversify into different markets. We've seen significant growth
and attraction in Asia and the Middle East in the past.
So I think to your point about two thirds of
our respondents wanting to have access to the alternative investments,
(08:44):
I think that's true. Whether or not they'll commit is
dependent on that point in terms of where they see
value and where they see growth and.
Speaker 2 (08:52):
What about crypto, And one of the things that you
talk about in the report is how important it is
for wealth managers to be able to offer their high
networth investors' access to all investment classes and crypto. Again,
is that a class that I'm loath to call it
an asset class to be honest, But is that a
group of possible places where you might put some money
about that investors are more interested in?
Speaker 1 (09:12):
Now more interested is a subjective statement, but again I
would put it in the same class as alternative investments.
If you're wealth manager can give you access to digital assets,
to crypto, and they can do it through a platform
that's easily accessible, then I think that is kind of
meeting these high net worth individuals their expectations and giving
(09:36):
them the option to choose that within their portfolio, whether
or not they take that decision, I think, as I say,
it's a different point.
Speaker 2 (09:42):
It's a different matter.
Speaker 3 (09:44):
Yeah.
Speaker 2 (09:59):
One of the things you're saying this new report is
that we are, at your words, clear inflection point for
the wealth management industry. What does that mean and why now?
Speaker 1 (10:09):
I think the inflection point I think that's probably founded
on three perspectives here, Maren. I think the first point,
I would say is just growing this growing wealth. And
I think we've seen this trajectory over thirty years. Actually
we've been writing this report for thirty years, which yeah,
makes us all feel a little bit dated, but.
Speaker 2 (10:26):
The way dated, but expert dated, but.
Speaker 1 (10:28):
Expert and d experienced. But I think the wealth management
industry obviously continues to grow to service this growing population
and say it grew by seven point eight percent globally
in twenty twenty five. But also the expectations of those individuals.
And we started this conversation by defining high net worth individuals.
(10:50):
The expectation is that we can bring very personal, a
very personal relationship, a very personal experience, and we can
also bring the breadth of products and services that those
individuals require. So I think there's a real kind of
call to action for the wealth managers to move away
from some of this kind of standard wealth band segmentation
(11:12):
to bring very kind of personalized products and services.
Speaker 2 (11:16):
Why because most people, as far as I see it,
most people, until you get up into your thirty, forty,
whatever million dollar band, most people require the same things
from their wealth manager. They don't mind some talking in
your report about the importance of empathy led advice. And
I can't think of anything worse than my wealth manager
giving me empathy led advice. What I'd like him to
(11:38):
do is to make me absolute returns in excessive inflation
every single year without making a fuss about it. And
that seems to me that is what everybody wants from
their wealth manager. Not endless communication and empathy and complicated portfolios.
What am I missing?
Speaker 1 (11:54):
We might have to agree to disagree here, Marion, because
I do think that model where success is purely bag
some performance and it's purely denominated by your annual portfolio review,
is not the expectation in terms of the pace with
which the markets in the world is moving. And I
think high net worth individuals want to have the ability
(12:17):
to be able to optimize products and services on a
very kind of timely and a very real time basis.
Speaker 2 (12:24):
What does that What does that mean? Gareth? What does
that mean? Optimize products and services on a real time basis?
Surely you employ a wealth manager to manage your money
without constant reference to you, because it's a delegated activity.
But the way you seem to be looking at is
though it is a non delegated activity, but more of
a regular conversation in that when previously when we've talked
(12:48):
to we've talked about wealth management on the podcast. What
we do is we say to people, look, if you
don't want to manage your own money, get some guy
to go do it for you. Then you can sleep
at night and you don't have to think about it.
So is the suggest here that high networth individuals are
changing from that idea of I give my money to
this guy or woman and they're going to take care
of it and I don't have to do anything. I
(13:09):
can sleep at night because I know this guy's a
pro and he's got it under control. What you're talking
about seems to be a regular communication that involves empathy.
Speaker 1 (13:19):
There's definitely the need for more of a kind of
proactive and regular management of your portfolio. Now, I suppose
the point I'm making here is if you want to
delegate that and leave that on a twelve month schedule,
then that's obviously one requirement. However, I think there are
(13:39):
individuals who want to have opportunities to present it to
them in a very kind of immediate fashion. So as
things are changing, whether that be changes in the market,
changes in the geopolitical situation, changes in terms of their
kind of personal situation, meren, they're looking for their wealth
managers to be pro and to predict what's required based
(14:03):
on their requirements and objectives and intervene on that basis.
So I think we are seeing a demand for a
much more active relationship rather than a periodic relationship. And also,
I think this idea that we're operating in a very
kind of real time environment. You and I have become
very comfortable with the immediate experience, the real time experience
(14:26):
of being able to order an Amazon being delivered within
X number of ours if required. Again, I think in
a wealth management context, marin clients want to have that
level of insight they want their wealth managers to understand
their expectations and their objectives and to respond on that basis.
(14:47):
And the other thing I would say from our analysis, Maren,
we've seen if you're able to provide the level of
personalization that we're talking about here, those individuals will recommend
and you to their peers and to their friends, even.
Speaker 2 (15:04):
If you're charging more than the robo advisor down the road.
Speaker 1 (15:07):
And the other time now that we're saying is individuals
are having multiple relationships with their wealth managers. Five years ago,
six years ago, in twenty nineteen, something like thirty nine
percent of all individuals had a relationship with one wealth
management organization. When we look at that figure nine in
(15:28):
twenty twenty five, that's reduced to nineteen percent. So my
point is, Maren, individuals are looking towards multiple organizations to
provide access to the products and services they need.
Speaker 2 (15:41):
That is one of the numbers that jumped out as
me as well. And I think you may look at
that and say, maybe they're not satisfied with one and
so they're moving to another. But that doesn't Necesslily argue
against the idea that you want a personalized, empathetic wealth manager,
because if you have four different wealth managers, they definitely
do not have oversight of your full portfolio or of
(16:02):
your full lifestyle because you've got three other guys as
well who are doing something else. If you want that personalized,
empathetic one on one understand my family, understand my generational shifts,
understand my wealth, understand how I feel, etc.
Speaker 1 (16:18):
Etc.
Speaker 2 (16:19):
You'd want one wealth manager. This is like having four therapists.
Speaker 1 (16:22):
The kind of argument to that, I would say is
that if you can provide the full breadth of products
and services that's required under a single umbrella, under a
single umbrella, then I think you can maximize the strength
and quite frankly, the stickiness of that relationship.
Speaker 2 (16:39):
Okay, shift, this shift represents the failure of the industry.
Speaker 1 (16:44):
I think this shift represents that demand from clients for
a greater personalized relationship with empathy and also a greater
access to products and services because no one firm has
been providing that. And we've also seen merin to your point.
We've seen the advent of the robo advisors. We've seen
(17:07):
growth in that kind of digital only model. We at
the other end of the scale, we've seen growth in
terms of the family offices. So again, if you look
at the traditional wealth management organizations, there's competition from family offices.
There's competitions from the kind of robo advisors and in
the model where they're not able to deliver the experience
(17:30):
or the products and services that's required. That's meaning assets
are flowing away from the traditional wealth management firms to
the competition. And again in our report we quantify that
as something like one point five trillion of new assets
that have moved into that competitive sphere. So there's an opportunity,
(17:51):
but obviously there's clearly a threat as well.
Speaker 2 (17:52):
Yeah, and you're focusing the highest growth rates for the
robo advisors over their traditional the family offices, which makes
sense because the lower base, etc. But that is where
you're expecting to see the growth.
Speaker 1 (18:02):
It is. But again you've got to look at this
at an individual basis, because again when we look at
those ultrahi networth individuals with investable assets of greater than
thirty million, the rule of the family offers not just
the financial services that they're bringing marin, but some of
those non financial services around estate planning, inheritance likewise becomes
(18:24):
increasingly important. When we look at products and services. Of course,
we can talk about asset types, we can talk about crypto,
we can talk about alternatives. But I also think there's
a rule for the wealth management firms here to bring
those broader services to bear again in a way that's
directly relevant to their clients.
Speaker 2 (18:41):
Yeah, okay, so most marintalks money listeners I think are
probably at the top end of your millionaire next door,
maybe the bottom end of your million next door, or
maybe soon they'll be your millionaire next door. What should
they be looking for in a wealth manager?
Speaker 1 (18:55):
First and foremost, I think they should be looking for
performance manager that gives them the return that they aspire
towards in terms of their objectives. I also think they
should be looking for a wealth management firm that gives
them access to the products and services which they believe
will be relevant for them and their family going forward. Yeah,
(19:18):
and then the final thing I would say is a
wealth manager where they don't have to repeat themselves. Part
of our analysis suggested that individuals forty two percent of
the individuals in the high network that we interviewed have
to restate their objectives and requirements. Can you have a
relationship with an organization? He Here's your requirements once understands
(19:39):
them and actively manages those going forward, this idea of
personalization but also access to products and services.
Speaker 2 (19:47):
Yeah, I guess that robo advisory you do only have
to tell.
Speaker 1 (19:50):
Once indeed, and also a robo advisor can take advantage
of some of the artificial intelligence data and information and
that's increasingly available to optimize that relationship.
Speaker 2 (20:03):
Maron, Well, I suppose that is one of the questions
ever thinking about how do you find a wealth manager?
What are you looking for in a wealth manager? The
questions you're going to ask are taught me through your
performance and show me how that works relative to the
performance from other wealth managers, which I know is information
that is not always easy to get hold of. And
then what products and services are you providing? Can you
show me the whole suite and outside actual products? Do
(20:25):
you have a tax advice et cetera, et cetera legal
environment department? And then maybe this last question is can
you explain to me how you are using AI to
enhance your productivity?
Speaker 1 (20:36):
Yeah, well, you know, I think a lot of that
is focused on that role of the relationship manager, which
is still very key role across the industry. And again
when we looked at when we looked at the relationship
managers that we met and we talked to, I think
we talked to something like thirteen hundred of them as
part of our report. Maren still about forty percent of
the activity they do they consider as operational administration. Can't
(21:02):
you use AI to somewhat automate that and then ensure
that the relationship managers are spending their time bruly invested
in their clients and their clients wealth and their clients'
portfolios using artificial intelligence around things like know your customer,
some of the tools and techniques around managing meetings, and
(21:22):
some of the kind of communication on that basis, and
portfolio optimization. We still believe the relationship manager is key,
and even in the world of AI Maren, we still
believe there's a role for the human element, the human
judgment within the wealth management industry and that that relationship.
Using AI to support the relationship manager, but also using
(21:44):
AI to understand more about you as a client. Okay,
what do we know about Maren and the things that
she's doing Beyond.
Speaker 2 (21:51):
Maren wants to make two or three percentage points above
inflation every year and not be bothered. That's what Maren wants,
and I still think that's what most people.
Speaker 1 (21:59):
Well, you know, I think what we're talking about here
will hopefully not only meet your expectations, Maren, but exceed them.
Speaker 2 (22:05):
Okay, excellent. Can I ask you one last question before
we've finished, which is about family offices. We're seeing the
rise and rise of the family office. How much money
do you need for that. I'm not talking about a
single family offices. I'm sure some of my listeners are
rich enough for a single family office, but a multiple
family office or to get the kind of service you
might get from a family office type organization. Which bit
of high network do you need to slot into for
(22:27):
that and where do you start?
Speaker 1 (22:28):
I think, unfortunately, Maren, it's not the millionaire's next door.
Unfortunately is not the millionaire's next door. So I think
in that bracket, when you're getting north of five into
the kind of thirty million region, that's where that's when
you and your family will be will be relevant on
that basis, But again I would come back to understanding
(22:49):
truly what you want to achieve. I think we've seen
with the advent of entrepreneurs there's a lot of wealth
that's being generated through entrepreneurs and the transactions that they're
successfully executing within their respective ventures and businesses. And again,
as significant amount of wealth generated quite quickly, also lends
(23:11):
itself to that kind of family office scenario.
Speaker 2 (23:14):
Yeah, there'll be a lot of excitement around in the
wealth management community about the mega IPOs, right.
Speaker 1 (23:18):
Of course. Of course, we've got anthropic on the it
was on the books on SpaceX when we looked at
what was generating wealth previously, we talked about those equity markets,
we talked about stocks and shares, and I think it
continues to be a significant part of the growth that
we've seen over the last five years.
Speaker 2 (23:34):
Yeah, and it will be I'll tell you what, when
we next have this conversation, we tend to have it
in a reat. When we next have this conversation, we'll
know a lot more about how the young, newly rich
young like to have their money managed and what kind
of health managers there after, because assuming something doesn't get
horribly wrong, which of course it could, there will be
an awful lot of newly rich, relatively young people presumably
(23:54):
delegating a lot of that money management to the wealth
management industry. So we'll know a lot more in a year, won't.
Speaker 1 (24:00):
We We will, and I suppose my prediction is they
will definitely want that level of empathy and personalization that
we've talked about, Maren. But also I think they'll be
demanding in terms of the kind of products and services
from the wealth management industry and their relationship managers.
Speaker 2 (24:16):
Yeah, it's fascinating and we will find out. Gareth. Thank
you so much joining us today.
Speaker 1 (24:20):
Pleasure Maren.
Speaker 2 (24:31):
Thanks for listening to this week's Maren Talk to Your Money.
If you like our show, rate review and subscribe wherever
you listen to your podcast. Also be shorts, follow me
and John on x or Twitter. I am Meren s
W and John is John Underscore Steppek. This episode was
produced by Samasadi and Moses and sound designed by Blake
Maples Bestial. Thanks of course to Gareth Wilson and the
(24:52):
team at cap Gemini and questions and comments on this
show are always welcome. Our show email is Meren Money
at Bloomberg dotnut
Host
Merryn Somerset Webb
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