WELREX reflections on Cap Gemini’s World Wealth Report 2024 

Cap Gemini recently published an important and comprehensive “state of the industry” report – World Wealth Report 2024. Like many in the industry, the WELREX team absorbed this with great interest.  

Everyone will extract from the report what interests them and, like us, they may add their perspectives to Cap Gemini’s insights. From our viewpoint, three things resonated most relative to our experience of Wealth Management in general and the WELREX proposition in particular. 

1. HNWI wealth and population recovered in 2023 from 2022 lows – but is the industry focusing on the right audience segment? 

It’s pleasing to see that in 2023 Global HNWI wealth and population took upward trajectories – +4.7% and +5.1% respectively – after drops in 2022. Solid economic resilience, cooling inflationary pressures, and recovering 2023 global markets drove growth as HNWI wealth and population even surpassed the highs of 2021.

We were gratified to see growth in Emerging Markets: our focus at WELREX is to support HNWIs and their Relationship Managers in territories such as the Middle East, the former Soviet Union, and parts of Asia, so we stand ready to help and benefit from the 2024 horizon forecasts.  

The report emphasised the importance of UHNWIs (defined as those with >$30m in assets). According to Cap Gemini, that small group (1% of the population) accounts for 34% of overall global wealth. It’s logical that the bigger industry players – with larger fixed cost bases to cover – will continue to push the minimum client assets bar ever higher whilst not necessarily being able to focus on improving client experience. Digitally native players – like WELREX – don’t have these limitations. We’re intently focused on HNWIs with between $1-30m investable assets, who represent the balance of the wealth population. 

Cap Gemini data tells us that this group represents more than 22,500 individuals globally. We know they are active, high-growth, demanding clients who deserve the best offering and client experience to meet their growing needs and represent a significant opportunity. This group is our absolute focus at WELREX: as our current clients know, we have the right set-up, tools, and skills to give them what they demand and deserve. Why would you disadvantage a client with $5 million investable assets today purely because your senior management has set a bar of $20 million at the outset (or near-term potential)? 

2. Behavioural Finance and AI are key to understanding and delivering on client needs 

Cap Gemini acknowledges that usage of Behavioural Finance remains low across the industry. This surprised us since a focus on Behavioural Finance has been key to the WELREX platform from the outset.  

That said, with 75% of senior WM execs now stating that “AI will significantly impact the industry within the next two years”, the time is ripe for better tools to be used more pervasively. Firms are looking to leverage AI in pursuit of performance improvement across many aspects of their client service delivery. 

“By integrating behavioral finance with artificial intelligence, WM firms can better recognize and address HNWI client needs; and Gen AI can aid hyper-personalization of relationship manager/client experiences and communications.” 

Source: Cap Gemini World Wealth Report 2024 

At WELREX we use Behavioural Finance as an embedded part of our client onboarding process, with relevant AI tools deployed to assist investment analytics. This ensures that we intimately understand from the outset what our clients truly need and their behavioural biases – so that our investment solutions can be hyper-personalised, irrespective of client portfolio size.  

An example: one of our clients understands the fast-moving goods and services sector, having built a successful business in the industry. She has a high-risk tolerance and tends to add to the portfolio despite 30-50 % swings either way in its value. Our AI-assisted analytical tools can generate specific threads that include macro and micro analysis of the industry and its investable players. The latter enables our investment team to select suitable investment positions and keep sufficient cash in this client’s portfolio to capitalize on the investment opportunities from the watchlist (compiled and tracked by the investment team assisted with AI tools) to match that client’s convictions and behavioural investment style.  

3. As Cap Gemini says, “Wealth Management firms are data-rich but CX-poor” 

The report calls out strongly that the huge amount of customer and behavioral data flooding the industry is not resulting in improved customer service. It’s clear that investors are more sophisticated, more digitally savvy, and they evidence significantly increased demand for personal service. Firms need to get with the beat! 

At WELREX we are at the forefront of the personalisation movement. We know nobody likes to be treated as a generic part of some typologised group. This is particularly relevant to HNWI population. The backbone of personalisation here is to have ‘effective lenses’ through which the relationship manager zooms in, to focus on the client information most relevant. The algorithms alone are not the best tools to decide on relevance. Technology is good at collecting, tracking, and keeping data safe, but standardized decision-making trees behind the technology don’t do any favors to personalization.  A dedicated client experience team is needed to champion empathy and this is not possible without deep personal interaction. It is the Relationship Manager’s key task to coordinate with their client experience and technology teams to achieve the best customization for each client – be that around predictive analytics, frequency of interaction, and the style of client communications.   

We’ve long held the view that the highest quality Customer Experience remains a challenge for WM firms – see our article “Customer Experience: the next differentiator in Wealth Management”. That’s why we embed Behavioural Finance, supported by AI, as a fundamental part of our client journey. And we are committed to delivering hyper-personalisation across all our solutions. 

When it comes to investment decisions, we believe insights are the most valuable part of the client experience, and making sense of those insights is much more valuable than flooding a client with data. After all, a client may not have the academic or practical background to place the data in a ‘meaningful order ’in their mind, let alone the restriction they may have on their time.