The Capgemini Research Institute’s World Wealth Report 2024 has revealed a significant increase in the population of millionaires, reaching an all-time high of 22.8 million worldwide. The report highlights the growing importance of behavioral finance and artificial intelligence in wealth management to meet high customer expectations.
On June 5, the Capgemini Research Institute published its 28th World Wealth Report, revealing an all-time record. The population of HNWIs (High Net Worth Individuals) has increased by 5.1% to 22.8 million worldwide, and continues to grow despite the unpredictability of the markets. In total, they have accumulated wealth of $86.8 trillion.
This amount, representing more than three years of US GDP, has never been reached since the creation of this annual study.
“The small decline we saw last year (-3.3%) has been completely erased,” commented Elias Ghanem, director of Capgemini’s financial services institute.
To arrive at these figures, the report covered 71 countries, representing over 98% of the world’s gross national income and 99% of global market capitalization. The Capgemini 2024 Global HNW Insights Survey questioned 3,119 HNWIs, including over 1,300 ultra HNWIs, across 26 major wealth markets in North America, Latin America, Europe, the Middle East and Asia-Pacific.
The 2024 Wealth Management Executive Survey also gathered 75 responses from independent wealth management or brokerage firms, universal banks and family offices across 12 markets in North America, Europe and Asia-Pacific.
HNWI on the rise worldwide
The growth in millionaires was particularly marked in North America, with an increase of over 7% in both the number of people and overall wealth. “This dynamism is linked to the strong economic resilience, the easing of inflationary pressures and the formidable recovery of the US equity market,” explains the report.
US individuals, who are more invested in the stock market than the rest of the world, benefited greatly from the stock market rally of theAmerican Tech giants (Google, Apple, Facebook, Amazon, Microsoft, Nvidia and Tesla), contributing to the 25% rise in the S&P 500 last year.
Latin America and the Middle East saw more limited HNWI growth, with wealth increasing by 2.3% and 2.9% respectively, and population by 2.7% and 2.1%. By contrast, Africa is the only region where HNWI wealth (-1.0%) and population (-0.1%) declined, due to falling commodity prices and lower foreign investment.
In Asia-Pacific, millionaire growth reached 4.5%, followed by Europe with an increase of 4%. France stands out with a 6.5% rise in the number of millionaires (827,200 vs. 777,700 in 2022) and an increase in their overall wealth from $2,232 billion to $2,377 billion.
“The French economy is doing well, buoyed in particular by the luxury goods and energy sectors. The CAC 40 has gained 17% in 2023, and luxury goods have recovered well despite the Chinese market, which has yet to take off again,” analyzes Elias Ghanem.
Investment and wealth transfer
Millionaires have resumed their investments, reducing the share of cash from 34% to 25% in one year. Two-thirds plan to invest more in venture capital this year. However, they expect more advice.
Ultra-high-net-worth individuals (UHNWIs), the most concentrated of the wealth groups, hold over 34% of total HNWI wealth and represent just over 1% of the total HNWI population. These ultra-rich (over $30 million in assets) have increased the number of intermediaries to manage their wealth, from three in 2020 to seven in 2023, making increasing use of family offices for multi-generational management.
In addition, the report forecasts a transfer of more than $80,000 billion over the next two decades, boosting demand for value-added financial and non-financial services.
“Customers are demanding more from their wealth managers, and the stakes have never been higher,” says Nilesh Vaidya, Global Industry Head of Retail Banking and Wealth Management at Capgemini.
Value-added services such as tax planning and passion investments are becoming essential for HNWIs.
The importance of behavioral finance
Over 65% of HNWIs recognize that their biases influence their investment decisions, particularly during major life events such as marriage, divorce and retirement. As a result, 79% of HNWIs would like to be guided by relationship managers (RMs) to help them manage these unknown biases. By integrating behavioral finance with artificial intelligence, wealth management firms can assess clients’ reactions to market fluctuations and make data-driven decisions less likely to be impacted by emotional or cognitive biases.
“AI-powered systems can analyze data and detect patterns that are difficult for humans to recognize,” the report points out.
The World Wealth Report 2024 thus shows continued growth in millionaires, with significant implications for wealth management services. The increased demand for advice and value-added services offers a lucrative opportunity for wealth management companies in a context of intergenerational wealth transfer. This study is a promising indicator for the Professional Fortunes ranking, to be published on July 12.
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Featured photo : © Capgemini
