World wheel of fortune propelled by Asia Pacific but braked by Brazil

Latin America is “dragging down” growth in the world's population of the super-wealthy but Asia Pacific is tipped to push global wealth over the $100 trillion mark.

Ultra-high net worth individual (UHNWI) wealth traditionally drove high net worth individual (HNWI) wealth each year however, the usual boost did not materialise in 2015, according to new World Wealth Report by Capgemini.

While Latin Americans accounted for 3.4% of global HNWIs last year, they made up 8.4% of global UHNWIs. They held 12.6% of HNWI wealth but 28.7% of UHNWI wealth, more than any other region.

It was because of this outsized influence that Latin America's struggles impacted the ultra-wealthy, both in the region and globally.

The “trouble spot” of the continent was Brazil as it accounted for 56.3% of Latin American UHNW wealth, the report said.

“With a striking 5.9% decline in UHNWI wealth, Brazil was the main cause of below-par HNWI growth in Latin America, as well as slower global UHNWI growth.”

The UHNW outlook to 2025 was considerably brighter in Asia-Pacific, where financial services, technology and healthcare were expected to increase the wealth of HNWIs by a third.

The region's prosperity was on course to raise world wealth to $100 trillion by 2025.

Asia-Pacific already doubled its HNWI population and wealth between 2006 and 2015. By hitting $17.4 trillion, the region surpassed North America at $16.6 trillion for the first time to become the region with the largest amount of both HNWI wealth and population globally.

“China was fundamental to the increase, tripling its HNWI population and wealth during this time,” the report said.

“Meanwhile HNMI wealth expanded much more slowly in Europe (34.3%), where it was curbed by the staggering impact of the financial crisis, as well as in Latin America (44.3%).

“North America witnessed a robust growth rate of 47.5% during the same period.”

The report found hundreds of financial technology firms, or fintechs, have developed new or improved ways of standard wealth management functions, including client acquisition, advice and compliance.

New Fintech functions including automated advice platforms, open investment communities, and third-party capability plug-ins, were gaining favour with HNWIs as alternatives to personal advice, again, especially in Asia-Pacific.

Nearly half of HNWIs took their investment ideas from peer-to-peer digital networks at least once a week. The majority at 83.5% of younger HNWIs said they expected to increase their use of those networks in the next 12 months.

While trust and confidence in wealth management firms had increased “significantly” over the past 12 months, HNWIs held less than one-third of their wealth with wealth managers. Under-40 HNWIs were even less likely to turn to wealth managers (28%), the report found.

In 2015, wealth managers joined HNWIs in asking for more digital capabilities from wealth firms, which pressured firms to improve their digital maturity or risk losing profits, clients, and staff.

The 20th anniversary report was based on survey responses from more than 5,000 HNWIs and 800 wealth managers across the globe.