HNIs now hold 48% of global wealth, projected to reach 55% in the medium term: Report

The rich are getting richer with high net worth individuals (HNIs), who currently control 48 per cent of global financial wealth, poised to increase their share to 55 percent in the medium term, according to a recent report by Avendus.

This marks a rise from 41 per cent in 2013. The growing wealth of HNIs underscores a significant shift in global financial dynamics, with their influence continuing to expand in the coming years.

The increase in HNI wealth has outpaced the growth in their numbers, indicating a rise in wealth per individual. Asia and the Middle East have emerged as leaders in HNI wealth growth, with a long-term growth rate of 8 per cent.

This is higher than the rates in North America and Europe, which stand at 5 per cent and 4 per cent, respectively. While the Americas still have the largest share of HNIs with assets exceeding $1 million, the Asia-Pacific region is expected to play a pivotal role in future wealth creation due to its burgeoning mid-affluent population.

The report also highlights a notable shift in wealth management preferences among HNIs. Historically, a significant portion of global wealth was self-managed, relying on individual knowledge and traditional investment methods.

Today, less than half of HNIs manage their wealth independently. The increasing complexity of financial markets and the need for tailored strategies have driven more than half of HNIs to adopt professional wealth management services.

Professionally managed wealth has seen considerable growth, expanding by 7.6 per cent globally in 2021. Additionally, 78 per cent of HNIs now consider value-added services essential in their wealth management relationships.

Key services sought by HNIs include investment management, inheritance advice, tax planning, retirement planning, and real estate investment advice.

The report further reveals that HNIs are allocating an increasing share of their wealth to alternative assets.

These include private equity and other non-traditional investments, which currently account for 20 per cent of the global assets under management (AUM) for asset management companies.

Alternatives have gained popularity due to their potential for higher returns and their exclusivity to professional wealth management platforms.

As HNI wealth continues to grow, the shift toward professional management and alternative investments is set to redefine global wealth dynamics.