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HNWIs seek to diversify into alternative investments

29 June 2021

April French Furnell

HNWIs are looking to alternative investments to diversify their portfolios, according to the 25th edition of Capgemini’s World Wealth Report.

In 2020, the global HNWI population grew by 6.3%, while HNWI wealth grew 7.6% just falling shy of US$80 trillion. The 25th anniversary edition of Capgemini’s World Wealth Report examines global wealth evolution in the past year and HNWI trends and influences from the last quarter century. Among the report’s findings are that HNWIs have become more involved in their investments over the last 25 years, seeking more and broader advisory support.

In light of the current stock market surge, HNWIs are seeking to diversify their portfolios with alternative investments.

“HNWIs are keen to explore new asset classes such as cryptocurrencies and other digital assets such as NFTs. We’ve seen that 72% of HNWIs have invested in cryptocurrencies over the last year. While these asset classes might not form a significant portion of HNWIs portfolio yet, due to their volatile nature, it will be important to address client interest in these new investment avenues through suitable offerings over time”, said Cliff Evans, Capgemini Vice President and Head of Digital for Banking.

On the ESG front, sustainable investing is now maturing, with 43% of ultra-HNWIs and 39% of younger (age ≤40) HNWIs likely to request an ESG score for products offered by their firm.

The report concludes that wealth management was and continues to be a relationship-based business. "With wealth management client profiles rapidly evolving to include millennial and Gen Z HNWIs, women, non-traditional families, and more, firms must train their advisors and staff to meet more diverse segment-specific client expectations and behaviors".

 

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