High-Net-Worth Individuals (HNWIs) are generally defined as individuals with over $1 million in liquid assets after liabilities. According to the World Report Series 2024 from the Capgemini research institute, the distribution of HNWIs globally is as follows:
- 7.9 million in North America
- 7.4 million in the Asia-Pacific region
- 5.8 million in Europe
- 900 thousand in the Middle East
- 600 thousand in Latin America
- 200 thousand in Africa
Attracting and retaining HNW clients is crucial for business success, as they often generate a significant portion of revenue. However, traditional marketing strategies may not be effective for this demographic. A specialised approach focused on providing exceptional value is necessary.
Changing Expectations of HNWIs for Wealth Management
The "Great Wealth Transfer" is underway, with assets being passed to Millennials and Gen Zs. This shift is changing the expectations of HNWIs. Older generations valued exclusivity and physical interactions, while newer HNWIs prioritise sustainability, personalisation, and digitisation.
Key trends include:
- ESG Investments: Younger HNWIs are environmentally conscious and seek wealth management services focused on ESG (Environmental, Social, and Governance) investments.
- Digitisation: New HNWIs prefer digital communication channels with their wealth managers. Investment firms need to adapt by investing in relevant technologies.
- Personalisation: HNWIs expect customised services tailored to their individual needs, similar to the personalisation they experience with other brands.
Meeting the Expectations of HNWIs
To attract and retain HNWIs, wealth management services should:
- Use Advanced Digital Platforms: Utilise tools like digital client portals for streamlined communication and data collection for personalisation. Risk management modules for calculating risks, researching sustainable investments, and adjusting risk criteria. AI investing modules for robo advisors. Elaborate reporting modules for presenting results in various formats.
- Care for Customer Experience: Prioritise positive customer experiences and build trust. Utilise digital channels, adjust reporting, and manage risk effectively.
- Be Efficient: Optimise internal processes and invest in automation to improve efficiency and avoid client dissatisfaction.
Meeting the expectations of HNWIs in wealth management requires both modern technology and a client-centric mindset. Ultimately, traditional global wealth management firms must balance competition and collaboration with family offices to scale up engagement with ultra-high-net-worth individuals: a collaborative ecosystem of partners to create a one-stop shop is key to success with this complex and lucrative client segment.
