The number of dollar millionaires fell last year, including in Switzerland. To better balance their client mix, wealth advisors should target investors before they reach HNWI status.
Switzerland has fewer dollar millionaires, according to the latest edition of the «World Wealth Report» by consulting firm Capgemini, with the number of high-net-worth individuals (HNWIs) in Switzerland falling to 468,100 millionaires last year. That's 10,800 HNWIs than the previous year, with the total wealth of the rich falling by 3.1 percent to $1.4 trillion.
Biggest Decline in a Decade
Still, an international cross-comparison shows Switzerland fared comparatively better than its global peers, with the number of HNWIs with investable assets of at least one million dollars declining less than the global average. Globally, there are 21.7 million, or 3.3 percent, fewer dollar millionaires whose total wealth fell 3.6 percent to $83 trillion in 2022, marking the sharpest decline in a decade.
The main reasons were the slump in the financial markets, high inflation, rising interest rates, and geopolitical turmoil. A regional comparison shows North America recording the sharpest decline in assets, down 7.4 percent, followed by Europe which saw a 3.2 percent decline, and Asia-Pacific falling a more modest 2.7 percent. Africa, Latin America, and the Middle East proved resilient, benefitting from strong oil and gas sector performance.
More Focus on Affluents
According to Capgemini, not enough wealth managers are focusing on individuals with investable assets of less than $1 million, and recommends they target more investors before they reach HNWI status and help them expand and diversify their business over the long term.
The affluent segment, with investable assets between $250,000 and $1 million, represents a new target group as it continues to grow in size and financial clout, according to the report.
Hesitant Financial Institutions
Although this client group accounts for about a third of total HNWI assets, with nearly $27 trillion, 24 percent of traditional wealth managers and 33 percent of universal banks aren't targeting it. Concerns over profitability make them reluctant to target and serve this demographic.
The report goes on to say aging HNWIs are a slower-growing segment because they are less risk-averse. If affluents are targeted early in life and wealth, they can become future HNWI clients in the wealth management system.
Ripe for Change
However, only 18 percent of affluents surveyed said they were satisfied with their current wealth manager, making them a ripe target for switching if they are offered a better deal.
Some 58 percent said they lack the knowledge and support to make investment decisions in volatile times like 2022, while 42 percent are unaware of investment risks and that their investment strategies do not fit their life goals.
