BCG Sees Pandemic As Opportunity for Wealth Managers

Boston Consulting Group thinks private banks can expect to do good business after the coronavirus pandemic led to a rise in global wealth from which the super-rich have benefited.

The world has grown richer despite the lingering economic fallout of the coronavirus pandemic and private wealth has increased considerably, Boston Consulting Group’s (BCG) «Global Wealth 2021» report published Thursday showed.

BCG put this down to the moves on financial markets as well as higher household savings rates due to the drop in consumption caused by lockdowns.

Nothing on Growing Gap Between Rich and Poor

The report did not touch on the widening of the gap between rich and poor during the pandemic. However, the largesse of the central banks has not filled everyone’s pockets but only those with capital investments.

As a result, the super-rich, defined by BCG as those with over $100 million in assets, had been able to benefit disproportionately from the moves on the financial markets. Over 6,000 more people had become super-rich, the report said.

60,000 People Control 15 Percent of Global Wealth

The report added that over 60,000 people can now be labeled as ultra-rich. They controlled $22 trillion, or 15 percent of the world’s investible money.

BCG assumes global wealth, in other words, that of the rich will continue to grow significantly over the next five years.

Affluent Clients, Pensioners Seen as Opportunity

It said this created opportunities for wealth managers in three categories of client: The first was the so-called «affluent clients» who had so far been interested in simple investments and who were structurally underserved by banks and wealth managers.

Globally 331 million people, with assets of between $300,000 and $3 million, belong to this group. They hold $59 trillion in investable assets and offer wealth managers the opportunity to earn up to an extra $118 billion.

Pensioners made up the second group and their numbers are rising. The report said that by 2025 this group’s wealth would total $41.1 trillion, which would also mean potentially good business opportunities for wealth managers.

Wealth Managers Not Ready for «Ultras»

The third group is the «ultras». BCG said they were becoming younger and younger and had a more long-term perspective on investing, a greater appetite for risk and did not only want a return on their money but also a positive influence on society and the environment.

However, many wealth managers were not ready to serve these new «ultras». They did not have a firm understanding of this group’s needs and there was a lack of personalized services, BCG said.