Capgemini: The US$12 Trillion “Big Tech” Threat
“Big Tech” firms which could see as much as US$12 trillion in wealth. That is, if they decide to offer wealth management as part of their services.
More than 50% of global High Net Worth Individuals (HNWIs) are reportedly keen on Big Tech wealth management, according to Capgemini’s latest 2018 World Wealth Report. A staggering 81.5% of Asia-Pacific’s HNWIs are reportedly the second highest interested individuals after Latin America.
In 2017, global HNWI’s wealth reportedly expanded by 10.6%, and for the first time in history it broke the US$70 trillion mark. When it comes to the growth of the HNWI’s population and wealth however, Asia-Pacific is maintaining its lead over North America.
No Rise In Global Client Satisfaction
Capgemini’s findings revealed that discretionary mandated clients actually performed better than clients who are self-directed, despite the double-digit returns received within the past two years. The findings also revealed that there was no rise in global client satisfaction when it came to wealth managers.
Singapore was on the countries that experienced a decline or plateau in client satisfaction. Capgemini’s Head of Asia Wealth Management, David Wilson, states that Big Tech firms potentially entering Asia was to be expected, and this would “create another wind of urgency that forces firms to move.”
Wilson stated that while there was strong investment performance globally in 2016 and 2017, satisfaction did not rise and that is a concern. He also said that issues such as fee transparency, lack of personal connection and personalization by the wealth managers could attribute to the low satisfaction levels.
Entry of Big Tech Firms into Wealth Management Segment in The Future
According to Capgemini, it is still uncertain whether there will be a widespread entry of these Big Tech firms into the wealth management segment, but it was only a matter of time. The consensus among the wealth management executives is that Asia-Pacific will be leading the Big Tech charge into wealth entry, followed by North America and Europe.
Collaboration, or a combination of competition and collaboration, could be one of the entry points utilized by Big Tech firms, Capgemini expects. 60% of HNWI’s globally have stated that they would be willing to venture into a wealth management relationship with these Big Tech firms within a 6-month period, while 80% said they would within a year.
Cryptocurrencies have also caught the attention of HNWI’s, many of whom are cautiously interested in these currencies as investments or store of value. 71% of HNWI’s below the age of 40 did place receiving information about cryptocurrency on their list of priorities with high importance to their wealth management firms. However, ambivalence regarding this has been the trend among firms, with only 34% of the HNWI’s stating that their wealth managers are in fact providing the desired cryptocurrency information.