Retirees, a fast-growing global demographic, are another appealing market. Many are underserved and adversely affected by what BCG calls an “advisory gap” that prevails during the retirement phase of life.
Today, individuals in the 65-and-older cohort own $29.3 trillion in financial assets accessible to wealth managers. BCG said that figure will grow at a compound annual growth rate of nearly 7% over the next five years, enabling wealth managers globally to target some $41 trillion in financial wealth by 2025.
Surging Ultra-Wealthy Segment
In addition to the simple-needs and retirees segments, ultra-wealthy individuals whose personal wealth exceeds $100 million expanded in 2020, with 6,000 people joining the 60,000-strong cohort, which has experienced year-on-year growth of 9% since 2015.
The category currently holds a combined $22 trillion in investable wealth, 15% of the world’s total.
China is on track to overtake the U.S. as the country with the largest concentration of ultra-wealthy individuals by the end of this decade, according to the report.
If investable wealth continues to rise in China at its current annual rate of 13%, the country will host $10.4 trillion in ultra assets by 2029, more than any other market and slightly ahead of the U.S., which will have a forecasted total of $9.9 trillion in such wealth by 2029.
The faces of the ultra-wealthy are changing too, with the rise of the next-generation segment, according to the report. These individuals, between 20 and 50 years old, have longer investment horizons, a greater appetite for risk and often a desire to use their wealth to create positive societal impact as well as earn solid returns.
However, many wealth managers are not yet ready to serve them, the report said.
“High-growth markets represent a massive opportunity, but wealth managers must build a genuine understanding of local differences and also key demographic changes,” Zakrzewski said. “For example, women now account for 12% of ultras, most of whom are based in the U.S., Germany and China.
“The next-gen segment is also going to be an influential driver of future growth in the next decade or so. Whether it’s a simple-needs or ultra-high-net-worth client, managers need to offer a personalized service in order to effectively capture the next wave of growth.”