world wealth report 2016 key findings -...

World Wealth Report 2016Key Findings

November 2016

2Copyright © Capgemini 2016. All Rights Reserved

20160623_WWR 2016 Client Presentation Deck_vFinal

Agenda

Overview

High Net Worth Market Sizing

Key Findings from the Global HNW Insights Survey

Looking Forward: Changing Ecosystem and Digital Adoption Drives Need

to Invest in Transformation

Spotlight: Digital Maturity an Elusive Goal for Wealth Management Firms

Way Forward

Overview



WWR 2016: Survey covering over 5 200 HNWIsand 800 wealth managers across 23 countries

4

Four Components of 2016 World Wealth Report

1

3

2

4

High Net Worth

Market

Sizing and Impact

of Key Drivers of

Wealth

HNWI Investment

and Allocation

Preferences

Anniversary

Special! - 20

Years of the World

Wealth Report and

Looking Ahead

Spotlight on

Digital Maturity of

the Wealth

Management

Industry

High Net Worth Market Sizing



By 2025, HNWI Wealth to reach US$100 trillion by 2025, almost triple the amount of 2006

8,417,4

42,1

11,2

16,6

25,7

10,1

13,6

19,9

5,1

7,4

11,7

1,4

2,3

4,4

0,9

1,4

2,3

0

20

40

60

80

100

120

2006 2015 2025P

HN

WI F

ina

ncia

l W

ealth

HNWI Wealth Growth

2006–2015 2015-2025P

Total 37.2

Total 58.7

Total 106.0

54.9%

106.4%

47.5%

34.3%

61.7%

44.3%

57.5%

Middle East

Latin America

North America

Asia-Pacific

Europe

Africa

Global

65.5%

142.0%

54.4%

46.2%

92.0%

58.4%

80.7%

HNWI Wealth Projection, 2006, 2015, 2025P (by Region)

Source: Capgemini Financial Services Analysis, 2016



Among the Nordics, Demark saw the highest growth in the number of HNWIs

Sweden

93,1

103,0

0

20

40

60

80

100

120

2014 2015

# o

f H

NW

Is (

‘000)

• Real GDP expanded by 3.8% in

2015

• Housing prices increased by 12.4%

in 2015

• Market Capitalization increased

6.0% in 2015

• National savings as a percentage

of GDP increased to 30.4% in 2015

10.6%Change

(2014–’15)

+

+

+

+

Denmark

69,0

77,0

0

15

30

45

60

75

90

2014 2015

# o

f H

NW

Is(‘000)

• Real GDP expanded marginally by

1.1% in 2015

• Real estate prices increased by

5.3% in 2015

• Market Capitalization increased by

6.0% in 2015

• National savings as a percentage

of GDP decreased marginally to

reach 25.5% in 2015

11.6%Change

(2014–’15)

-

+

+

+

Norway

126,9

136,7

0

30

60

90

120

150

2014 2015

# o

f H

NW

Is (

‘000)

7.7%Change

(2014–’15)

• Real GDP grew by 1.6% in 2015

• Housing prices recorded a growth

of 2.0% in 2015

• Market Capitalization declined by

11.6% in 2015

-

+

+

-

+ Drivers of Wealth

Inhibitors of Wealth

Key Findings from the Global HNW Insights Survey



HNWIs trust and confidence in wealthmanagement firms increased

61,9%

46,4%

60,8%

73,9%

59,4%

53,5%

35,1%

30,8%

56,9%

57,5%

2015 2016

20.6%

33.2%

18.8%

12.0%

24.1%

25.5%

41.8%

43.6%

23.9%

24.6%

2015 2016

Wealth Manager

Wealth Management Firm

Financial Markets

Regulatory Bodies and Institutions

Personal Ability to Generate Wealth

Primary HNWI

Relationships

Industry Infrastructure

Wealth Sentiment

Disagree Agree

Source: Capgemini Financial Services Analysis, 2016; Global HNWI Insights Survey 2016, Capgemini

HNWI Trust and Confidence in Key Stakeholders



Primary wealth manager21,8%

Retail bank account18,4%

Physical cash14,9%

Other wealth managers

10,3%

Locked up in my business10,1%

Other24,4%


Investable Wealth Across Entities and

Accounts, Globally, Q1 2016

Most Important Elements for HNWIs to Choose

Wealth Management Provider, by Age, Q1 2016

28,7%

40,6%

49,3%

36,8%

56,6%

31,5%

35,1%

37,7%

39,1%

39,5%

0% 15% 30% 45% 60%

Access to investmentresearch and knowledge

Custody/safekeeping ofassets

General financial planningexpertise

Access to investments

Advice on investments

RespondentsUnder 4060+

17.1

2.3

11.6

5.5

2.8

Importance

Difference (PP)

Consolidated wealth management and sophisticated

view on investments to attract HNWIs



HNWIs are moving away from fee aspercentage of assets


Payment for Wealth-Related Services

30,1%

21,9%

18,0% 17,4%

12,7%

23,6%

20,5%

28,1%

16,1%

11,6%

0%

10%

20%

30%

40%

Percentage of assets Modular fee forservice modules

Based on investmentperformance

Fixed yearly fees A combination of theabove

(% o

f re

spondents

)

Current Ideal

Difference

(Percentage Points)10.11.4 1.3 1.16.5

EXAMPLE: Introduction of modular fee structures with standard asset-based fees on

automated (3rd party) advice, and add-on fees for individual wealth manager services

Looking Forward: Changing Ecosystem and Digital Adoption Drives Need to Invest in Transformation



Flexible investment strategies

to counter low interest and low

inflation macro environment

Lending increasingly viewed as

key to expanding business with

HNWIs

HNWIs want to make thoughtful

investment with a positive social

impact

Holistic, goal-based advise,

based on achieving clients’ goals

from business to lifestyle

Global WM market is characterized by an increasingly dynamic ecosystem and rising digital adoption

Offerings Ecosystem Dynamics

Banks collectively performing

non-differentiating tasks to

reduce costs

Robo advisers providing

automated advise through digital

channels, focusing on

convenience

Rising regulatory burden as

wealth managers are

overwhelmed by cost and

uncertainly of regulations

Intensifying competition due to

new entrants (Fintech) and

redoubled commitment to WM

by incumbents

Digital Adoption

Proliferation of digital channels

among HNWIs posing cyber

security risks

Outsourcing of non-core

processes such as HR and CRM

by leveraging cloud

Use of big data capabilities to

enhance efficiency of core

processes

Use of self-service capabilities

such as access to research

through an app

Source: Top 10 Trends in Wealth Management in 2016, Capgemini; Capgemini

Consulting Team Analysis; Annual Reports

Wealth managers not only need to

offer novel solutions…

… but must also play as a part of a

wider, dynamic, ecosystem…

… while whole heartedly

embracing Digital



Accessibility

• High fees limit access to wealth management

services for mass and mass affluent clients

• HNWI preference for performance-based fees

Customer Expectations

• Customers’ expectations of personalization,

efficiency and low costs continue to grow

Agility

• Ability to meet customer needs is limited by

organization structures and technology

infrastructure

Lack of Trust

• Customer trust has been slow to recover

following the financial crisis

Customer Demographics

• Inheritors of wealth may not necessarily choose

to keep their parents’ financial advisors

In addition, traditional WM players are marred by a combination of business and IT challenges

Business IT

Inconsistency

• Fragmented, local legacy processes and

technologies impede connectivity across the

organization

High Cost of Maintenance

• Updating and maintaining processes and

technologies are costly and time-consuming

Limited Flexibility / Agility

• Timely update of the processes and technologies is

limited due to costs and efforts required

High security requirements

• Rising adoption of digital channels among HNWIs

may, potentially, increase susceptibility to cyber

attacks

Source: Future of Financial Services, 2015, World Economic Forum



Firms are anticipating the need to invest for a changing industry

Source: Capgemini Financial Services Analysis, 2016; WWR Executive Interviews, 2016

Wealth Management Firms’ Future Investment Allocation

However, transformation takes a backseat to day-to-day needs

External Modernization

21,6%

Internal Modernization

17,8%

People and Culture15,8%

Keeping Up15,3%

Proposition Development

14,8%

Business Model14,7%

Spotlight: Digital Maturity an Elusive Goal for Firms



Wealth mangers join HNWI demand for digital tools but their satisfaction falls short

Wealth Manager Importance for/Satisfaction with Different

Digital Capability Areas

(20)

(15)

(10)

(5)

0

5

10

40% 45% 50% 55% 60% 65%

(%)

Ga

p B

etw

een

We

alth

Ma

na

ge

rs’

Imp

ort

ance

and

S

atisfa

ctio

n o

n D

igita

l

Ca

pa

bili

ty A

reas (

PP

)

Wealth Manager Importance with Digital Capability Areas (%)

Key: Wealth Manager perception of biggest gap areas on wealth manager specific digital capability of firms

Area in which wealth

managers are more

satisfied than the

importance they have

given to digital

capability areas

Areas in which wealth

managers are less

satisfied than the

importance they have

given to digital

capability areas

Ability to create interactive

proposals and presentations

Prospecting through social

media and other channels

Real-time access to

client profile and

portfolio information

Regulatory

compliance

Engage with client through

digital tools and social media

Mobile/Remote access to

applications and informationAccess to

multiple experts

and advisors

Client

segmentation

Risk assessment and

management for clients

Advisor desktop

with all applications

on a single platform

Access to client information from beyond

the wealth management business

Meeting and document

management

Ability to generate tailored

recommendations for clients

Source: Capgemini Financial Services Analysis, 2016; Capgemini Wealth Manager Survey, 2016

Ability to

leverage CRM

systems to

identify business

opportunities and

cross-sell



Wealth management industry has medium digital maturity, which will not be sufficient to tackle digital disruption

Average Digital Maturity Score of Wealth Management Firms Across Enterprise,

Advisory, and Client Parameters


3,6

3,4

3,2

3,1

3,02,9

3,0

2,9

3,5

2,5

2,0

3,5

3,3

2,8

3,0

2,0

Enterprise Culture

Enterprise Capability

Advisory Engagement

Advisory Productivity

Advisory Capability

Client Capability

Client Experience

Wealth Firm Score Third-Party Analyst Score

Enterprise Vision



Digital maturity’s importance is going to increase as HNWIs increasingly embrace new FinTech offerings

49%

76%

70%

52%48% 46%

33%

67%

80%77%

64%59% 61%

68%

0%

25%

50%

75%

100%

Global Asia-Pacific(excl.

Japan)

LatinAmerica

Japan MiddleEast and

Africa

Europe NorthAmerica

2015 2016

(%)

Source: Capgemini Financial Services Analysis, 2016; Global HNWI Insights Survey 2016, Capgemini; Capgemini and RBC Wealth Management Global HNW Insights Survey 2015

Automated Advisory Services

HNWI Propensity to Use Automated Advisory Services and Current Frequency of

Usage of Peer-to-Peer Advice Forums

Use of P2P Advice Forums

47,5% 48,4%59,1%

34,8%

46,4%

69,1%

39,3%

13,3% 11,4%

11,9%

17,4%

13,0%

11,3%

18,1%

12,3% 11,0%

12,9%

15,8%11,2%

8,5%

15,9%

12,4%8,9%

9,5%

20,1% 13,3%

6,4%

17,0%

14,5%20,2%

6,7%12,0% 16,1%

4,7%9,8%

0%

25%

50%

75%

100%

Global NorthAmerica

Asia-Pacific(excl.

Japan)

Japan Europe LatinAmerica

MiddleEast

& Africa

Never

Once orTwice anYear

Quarterly

Monthly

At LeastWeekly



Fintech players are making a dent in the Wealth Management universe

Connect

investors with peers,

and advisors

on how to optimize

investments

AdviseInform

decisions by analyzing

massive amount of data

GlobalGlobal

Nordic

Global

Nordic

Invest

in online self-service

portfolios

International institutions have integrated digital solutions, but Fintechs are catching up

Global

Nordic



Rolled out own automated wealth

service, targeting people with as little

as $5,000 in savings

Make or Buy – Market Maneuvers by Global WM players

Schroders, a large European asset

manager, has backed Nutmeg, a

British start-up

JPMorgan Chase and Goldman

Sachs have backed Motif, a startup

that builds baskets of stocks based

on investment themes

Vanguard is launching its own low-

cost advisory service

Buy Make / Incubate

Goldman Sachs has created, incubated

and spun-off several startups including

Symphony (communication), Kensho

(information analytics) and Marquee

(risk management portal)

Way Forward



Change of business model to Fintech ecosystem, new advisory models, and digital should drive transformation

High-Level Digital Prioritization Roadmap in Wealth Management

Core/Strategic Focus Transformation Focus

Shift the business mindsetDevelop ROI model / cross-enterprise

support

Build vs. buy decisionsDevelop big data opportunities

Partner/ collaborate with FinTechsEngage wealth managers to test,

improve, and launch programs

Additional Recommendation for 2016 Strategic Recommendation from WWR 2014 Transformation Recommendation from WWR 2014

Note: Steps do not necessarily need to be taken sequentially

Source: Capgemini Financial Services Analysis, 2016; WWR Executive Interviews, 2016

Introduce new advisory models:

Holistic, collaborative,

personalized, hybrid

Embrace digital, drive omni-channel as

key strategic focus

Questions

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